Fintech & e-commerce Startups Venture

Restive Fintech Report Points To More Regulation In A Slower Funding Climate

Illustration of money clip with $100 bills.

Restive Ventures, a seed fintech investor, released its State Of Fintech 2023 report to support founders as they head into the new year. Its notable findings include a more active regulatory environment which protects consumers in the wake of the FTX collapse as well as supporting competition. The report also points to a tighter Series A funding environment and an increased appetite for partnering from incumbents. 

Restive invests at pre-seed and seed in fintechs, and  provides operational expertise in the regulated industry. Among its founder-focused activities are an annual founder trip to Washington, D.C., to meet with regulators, and speed dating events with industry partners.

“If you raise a seed round in this climate, assume that it’s going to be very hard to raise an A,” according to the report.

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Drawn from a survey of fintech seed investors, the report put average pre-seed valuations at around $9 million, while average seed values are now down around 50% — at $12 million. But the range is still wide. Tucked into this finding is that multiple seed rounds are perceived negatively by some investors. For these investors, raising further seed rounds instead of meeting milestones for a Series A suggests a startup is not reaching product market fit. 

More regulation

There is a shift in the regulatory environment from “innovation” to “enforcement,” according to the report. 

We spoke with Cameron Peake, a partner at the firm, on Restive’s findings around seed valuations, the increased interest in M&A, and the complex regulatory environment in 2023.

Restive partners
Restive partners Ryan Falvey, Cameron Peake, Tyler Griffin

Regulators are moving from“pushing innovation as an agenda item to wanting to ensure that there’s fair competition,” said Peake. They are making sure that both “customer protection and the ability for upstarts to play within broader spaces is protected.” 

A new focus is regulation around banking as a service. 

“Providing services to outside parties and the bank being the chartered institution just was never considered within the regulation,” said Peake, as previously, regional banks had vendor relationships but were not supporting fintechs with consumers using its services. 

“Regulators are posing hard questions about consumer data and are seeking to understand where risk actually lies in the three-way relationships among fintechs, BaaS providers, and the actual regulated bank,” stated the report.


One bright spot in the report is that major banks, insurance and traditional payment companies are keen to partner with fintechs, with 80% expecting partnerships to increase in 2023. And as the IPO market has narrowed and private valuations have come down, interest in acquisitions has increased. “A lot of these outdated systems are just ripe for M&A,” said Peake. 

Looking forward to 2023

The areas Peake is excited about in 2023 include financial infrastructure due to “outdated infrastructure that exists across these legacy financial institutions,” she said. 

More work needs to be done on compliance workflows around billing management, Peake said. One hot topic is digitizing payments for industries that have not yet migrated, such as payment solutions for school districts and their vendors. 

Illustration: Dom Guzman

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