After a couple of years of what can be considered fairytale level growth, tech startups and tech giants alike have been brought back to (harsh) reality this year. Raising record capital in the second half of the last decade, venture capital (VC) funding grew from US$19.4 billion in 2015 to as much as US$33.3 billion in 2020, an estimated 17% year-over-year increase. According to data from McKinsey & Company, deal activity increased along with VCs by as much as 1.2 times.

The spectacular growth continued at the turn of the century, with fintechs continuing to thrive on the backs of the pandemic-triggered acceleration in digitization and a financial system awash with liquidity. Funding increased by 177% year-over-year to US$92.3 billion, and the number of deals grew by 19%.

Unfortunately, all good things must, at least temporarily, come to an end. A market correction in 2022 triggered a slowdown in this explosive growth momentum. The level of funding since then tapered down as inflated growth expectations from the 2021 extraordinary results were anchored to business-as-usual levels, and as deteriorating macroeconomic conditions and geopolitical shocks destabilized the business environment. 

This has resulted in fintech valuations plummeting, with many private firms having had to face down rounds, and publicly traded fintechs losing billions of dollars in market capitalization. VC funding was significantly affected on a global scale and across sectors, dropping to US$459.6 billion in 2022 from $683.1 billion in 2021. Fintech funding faced a 40 percent year-over-year funding decline, down from $92 billion to $55 billion. 

It’s Not All Gloom and Doom in Fintech

While funding in fintech—when analyzed over a five-year period as a proportion of total VC funding—remained fairly stable at 12 percent and registered only a 0.5% decline in 2022, the industry as a whole continues to face a challenging future.

However, among the themes that McKinsey & Company and other think tanks anticipate will shape the next chapter of the industry is that not all fintechs are being equally affected during the market correction: fintechs in certain verticals or at particular stages of growth continue to prove more resilient than their peers.

Granted, these companies are few and far between, but some who’ve managed to be unaffected by VC investment declines have not only survived 2023 but have actually succeeded enough to help fintech sustain its overall growth trajectory.

Among those organizations has been Toronto-based global digital banking company, Black Banx.

Founded under a decade ago by German billionaire Michael Gastauer, Black Banx has since been setting new milestones since launching to the public in 2015. In its initial year of offering private and business accounts in 28 FIAT currencies and (eventually) 2 cryptocurrencies, the company earned the patronage of as many as 200,000 private customers.

Fast forward to 2023, and the now-group of financial institutions offering digital banking services in 180 countries has welcomed over 11 new customers in the short span of nine months, which brought its total customer base to 33 million and counting. At present, Black Banx is on-boarding an estimated 1.8 million new customers per month. It also delivered year-on-year revenue growth of 72% in the third quarter and 47% in the first half of 2023, substantially outperforming its original target of 55% in compound annual growth from 2022.

Fueling Future Success With Previous Success

Between the uncertainty of the Covid-19 pandemic and the economic slowdown that followed, Black Banx, like all the others in the finance and fintech industries, has had to face a bevy of challenges in just the last handful of years.

Unlike other fintechs however, Black Banx has been able to avoid the funding winter, thanks largely to maintaining a small board and having only one major shareholder from the start. Since its founding, Black Banx has been mainly backed by the Gastauer Family Office (GFO), which Gastauer founded and has helmed as president since 2008. According to various public sources, Gastauer invested between 2014 and 2018, US$380 million via his GFO to build Black Banx. By the end of 2018, Black Banx group reached a US$9.8 billion valuation, making it one of Europe’s most valuable fintech companies.

Since reaching that milestone, Black Banx’s future successes had been fueled by its past successes, as having a sole investor has meant having the flexibility to utilize most of the revenues earned to expand operations with little to no reliance on external funding.

“Being in a position where 3rd party funding was not a must to start and grow Black Banx, I realized that selling shares and losing equity at an early stage would become an expensive decision once Black Banx grew into a major market player,” Gastauer shares.

“With a current Senior Executive Team of 38 Board and Committee members, Black Banx has a rather complex corporate governance structure which is needed to fulfill all regulatory requirements and to operate a company of the size that Black Banx has become. Still, this is still modest in comparison to most others in the market, as having a tighter knit group allows us to make more unified decisions when it comes to revenue, its use, and the overall operations of Black Banx.”