EXCLUSIVE: “A Fintech Ice-breaker” – Slush 23 in ‘The Fintech Magazine’

After a difficult year in which many fintech founders got a frosty response to funding requests, did Slush 23 signal a venture capital thaw? We report from the heart of the investment and innovation conference in Helsinki

Once confined to sci-fi and the back offices of coding enthusiasts, AI is now a hot topic at the household dinner table and in fintech networking conversations alike.

So, it’s no surprise that global funding in AI and GenAI startups reached almost $50billion in 2023, an annual increase of nine per cent in an otherwise dire investment year for the sector. Despite the controversial firing and rehiring of OpenAI CEO, Sam Altman, the foundation model company garnered the most funding – and public – interest. Microsoft committed to spend $10billion on the startup over several years last January in the largest VC round of 2023.

The upheaval at OpenAI coincided with the irretrievable downfall of another Sam: Sam Bankman-Fried. Bankman-Fried was found guilty of all seven counts of fraud and money laundering in November, concluding one of the biggest fraud cases in American history and cooling investor enthusiasm for crypto projects to Arctic temperatures.

This was the backdrop for Helsinki’s annual investment and innovation conference, Slush, which welcomed more than 13,000 attendees from the global startup and VC community to the depths of a Finnish winter in December. Founded in 2008 with a modest initial audience of 250 attendees, in 2023 it spanned two sell-out days, with a pre-opening ‘Day Zero serving as an exclusive investor and founder day.

On Day Zero, a selection of pre-screened guests could enjoy a number of Slush and externally organised ‘side events’ dotted around the Messukeskus Siipi Conference Centre and the wider city. From startup tram-and-art tours, investor yoga and padel, to intriguing ‘Pre-seed Sauna and Ice Dips’ and the more prosaic ‘Navigating the New Horizon: EU Foreign Subsidies Regulation and Investment Strategy’, Slush offers every opportunity for ideas to stew and relationships between investors and founders to foster.

The bulk of Slush2023’s programme unfolded in the labyrinthian Messukeskus. Navigating the subterranean conference room, at any given moment the boom of a speaker delivering a TED-Talk-style oration from one of the event’s four stages cut through the din.

Fragments of advice on fundraising and inclusive hiring practices from the Founder Stage could be heard over fireside chats between VCs and founders of startup success folklore, including Severin Hacker, co-founder & CTO at Duolingo, and French entrepreneur and engineer, Romain Huet, head of developer experience at Open AI and former product manager at Stripe. Prophetic insights flowed from talks on the Horizon Stage, with 30-minute events entitled ‘AI Won’t Take Your Job, But The People Using It Will’, ‘Dawn Of A Surgical Renaissance’, and ‘The Modern Customer Experience Revolution’.

The Builder Stage, meanwhile, offered a structured programme of 15 seminars supporting would-be founders through every phase of building their company, from ‘#01 Validating Your Problem’, to ‘#15 Pricing Your Product’.

The Builder Stage itself was constructed from stone and sand, materials that, according to Slush, symbolise ‘the foundation upon which great companies are built – strength and endurance’. Slush was equally keen to shine a light on up-and-coming founders, with a series of sector showcase events at the Start-Up Studio. Notwithstanding an astonishing number of cafés and food halls, the best coffee – oat-milk lattes infused with rose – could be found in the heart of the coveted Investor Lounge. This hallowed space, shrouded by floor-to-ceiling black curtains and flanked by a reception desk of polite gatekeepers, was a hall full of numbered industrial-style benches and tables where founders and investors could pre-book short one-to-one meetings through the Slush event app.

Savvy investors max out their limit of 50 meetings here with the most promising founders that align with their investment theses. A partner at a UK-based VC observed that investors could find more potential investee UK startups in the Slush lounge than months of deal origination activity in the UK. Even without access to the app, investor or founder, you were still able to identify your target at the conference. Every attendee was mandated to wear an oversized ticket on a lanyard with their name and QR code linking to their Slush app profile.

“A partner at a UK-based VC observed that investors could find more potential investee UK startups in two days at Slush than months of deal origination activity in the UK”

The ticket was easily identifiable for passers-by and had to be visible at all times, presumably on pain of being ejected into the subzero Finnish gloom. Tickets were colour-coded and labelled – ‘Investor’, ‘Start-Up’, ‘Attendee’, and the occasional ‘Volunteer’ and ‘Ecosystem’ – but they need not be. Despite the flares of LED lasers and dimmed lighting, investors were easy to spot, cutting through the crowd, sporting blazers and gilets. Founders, meanwhile, adopted what has become the global uniform of the ‘tech bro’.

In white trainers, jeans, and, of course, a hoodie, they could be found all over the centre, revelling in the insights of their peers.Founder confidence was palpable at Slush, despite those jawdropping events of 2023 and a decrease across the board for VC investment in early-stage companies. Global startup investment fell to $285billion in 2023 – a 38 per cent decline year-on-year, down from $462billion, and the lowest for venture funding since 2018 (Crunchbase).

Fintechs, once the darlings of the investment scene, amassing more than $210billion globally in 2021 (KPMG), fell out of favour in 2023, experiencing a decline of more than 48 per cent from 2022 (S&P Global).The Americas attracted most investment for fintechs, accounting for more than half the investment volume in Q3 2023 (Statista). However, London secured its reputation as a leading financial capital as the UK fintech scene rallied towards the end of the year the global downturn, securing $1.4billion in funding during Q4 alone, with five deals surpassing $100million, demonstrating a turning point for the sector as fintech companies reach maturity. With this maturity, established banks and financial institutions are turning to fintechs for innovative solutions.

These strategic relationships were evidenced at Slush as the head of innovation at Mastercard, Mats Taraldsson, introduced the Mastercard Lighthouse programme and pitch competition, which is financed by the company’s Nordics & Baltics division. The programme, a partnership between regional banks, delivers structured workshops with fintechs and banking partners to help establish product-market fit and develop strategic commercial and investor relationships. The Mastercard Lighthouse is divided into two categories: FINITIV and MASSIV. FINITIV supports startups pioneering traditional banking innovation, while MASSIV stands for Make and Scale Social Impact Vision.

WARMING TO CRYPTO (AGAIN)

While cryptocurrencies and digital assets still pose a number of challenges to investors – including a fragmented market, lack of regulation, and trading complexities – it appeared fintechs seeking to overcome these market-wide challenges, and working with regulators to do so, were overcoming setbacks to the sector last year. The most striking confirmation of that at Slush was Mastercard Lighthouse’s FINITIV 2023 Overall Winner, Fideum Group.

Emerging in 2023 following the merger of GenBlock and blockbank, the Lithuanian-based entity enables traditional financial players and SMEs to integrate crypto-related assets and services into their B2C and B2B offerings while remaining compliant. Fideum is currently active in more than 120 countries and is supported by 30 institutional partners, and is now invited to pitch to Start Path, Mastercard’s global start-up engagement programme.

Commenting on the award at Slush, Fideum Group CEO, and co-founder of blockbank, Anastasija Plotnikova, said: “Being honoured as the Mastercard Lighthouse FINITIV winner is a testament to Fideum’s vision of bridging the gap between traditional finance and the burgeoning digital asset market. Mastercard’s recognition highlights the comcritical need for innovative solutions that Fideum addresses – creating a seamless, regulated pathway for institutions to engage with digital assets. This win is a nod to our foresight in solving real market challenges and Mastercard’s alignment with our goal to transform the financial sector.”

Fideum’s success signals the evolution of blockchain technologies away from a limited cryptocurrency use case.

Blockchain today is increasingly used to support wider blockchain-enabled infrastructure and data-driven AI models – infrastructure that is already familiar to investors and makes for more accessible investment opportunities as they assess the viability of a business and consider their board seat. Fideum also aims to solve a sector-wide challenge: striking a balance between innovation and regulation, where privacy and security are high priorities for financial services. The company is one of many examples of a wider trend that’s seeing startups shift focus from SME and smart payments, to blockchain and fraud prevention, as Inez Molnár, consultant at Mastercard, noted in her introduction to the pitching companies.The Nordic and Baltic partnerships that underpin the Lighthouse programme are emblematic of a region that leverages ecosystems to share resources and create a hotbed that enables tech to thrive.

Including an innovation powerhouse like Estonia, for instance (which has birthed an astonishing 10 unicorns from its population of 1.2 million), in a ‘New Nordics’ grouping is a wise move for a fleet of economies seeking to launch technologies on a global scale.‘New Nordics’ was a term coined by Eric Lagier, former head of mobile at Skype, and managing partner of byFounders, a venture fund focussed on seed stage startups in the region. Speaking at the conference, Lagier fervently encouraged them to ‘build for tomorrow’ and think big, beyond the problems of a localised market.As the conference-goers (are we Slushers?) crunched their way home, down Helsinki’s frosted streets, the investment setbacks of 2023 melted into distant memory.

Thanks to the Finnish, we all felt 2024 was the start of something new.

This article was published in The Fintech Magazine Issue 31, Page 13-14