How does Inflation affect FinTech Investment?

Everywhere you turn, prices are going up. This includes the price of gas, meals at your favorite restaurants, and the cost of a new car. Inflation is causing issues with the stock market, real estate, and so many other areas of investing. Some are even saying that these increases in prices are higher than they have been in over thirty years. But what does this mean for investments in FinTech companies? Read on to learn more.

What is a FinTech investment?

Let’s start with a little refresher on what FinTech investments are. FinTech investments are investments in companies that work toward the automation of the use and delivery of Financial Technology. Areas helped by FinTech companies can include fundraising and nonprofit, investment management, retail banking, education, and many more. You interact with financial technology daily and with the popularity of things like cryptocurrency on the rise. It’s no surprise that FinTech is on the rise, too. Check out this article to read more about investing in the FinTech ecosystem and this one to learn how.

Thoughts on inflation and FinTech investments

With the Price Index showing the largest jump in thirty years, and the stock market seemingly on a rollercoaster, it’s no wonder that people are unsure about investing. However, just because others are uncertain about investing doesn’t mean you have to be. After all, you’ve had experience investing in the past. You know how to weather the storm and come out ahead on the other side. Sure, things may seem rocky now, but the economy will only come out stronger on the other side. For now, let’s look at why investing in FinTech may be a good idea.

Costs have spiked

The cost of everything has increased, which includes the components needed to make various products. This means that the bottom line will either shrink, or the cost of the product will increase, potentially moving out of its ideal market by doing so. And, while there is hope that costs will decrease, there’s no guarantee of if or when that will be. Sure, you can wait for costs to go down, but that means others may pass you by and scoop up the next Bitcoin.

Computer chips are scarce

With the pandemic and everything it’s brought over the past two years, it’s no surprise that there are shortages. However, one of the areas hit the hardest is the computer chip market. With plants shutting down for health and other reasons, many companies have to wait several months or longer to get the parts they need. On the other hand, companies building off of already existing hardware, like software companies, then there’s less concern about whether or not a product will be able to get the various components or not.

Shipping problems by land, sea, and air

Shipping products has become a nightmare lately. With flights being grounded from lack of employees, ships getting suck in the Suez canal, and truckers striking and causing traffic jams that last for half a day, it’s no wonder that packages are taking longer to arrive. Not to mention the shortage of shipping containers, the loss of cargo in the open ocean, and the bottleneck of ships having to wait weeks to even get unloaded. That’s just a recipe for disaster.

As you can see, there are issues in all areas of the supply chain, some that you may not have even considered. What does all this mean for you as an investor though? If you play your cards right, make sure you properly evaluate their minimum viable product, and trust your instincts, then there are bound to be some huge gains. But where do we go from here? Is investing in FinTech the right option? Read on to find out. 

Where should you go from here?

According to Nigel Green, founder of one of the world’s largest financial advisory, asset management, and fintech organizations, “Investors need to avoid complacency. As central banks are increasingly flagging, inflation has become a concern and growth is to become slower due to supply-side bottlenecks – and, therefore, interest rate hikes are coming.  This will all trigger increasing market volatility moving forward as the world readjusts again.”

So, there are real opportunities to be had, but navigating the territory is set to become more complex. Why navigate it alone when you could be saving yourself time and money by using an ecosystem like the Finnovating platform to get ideas on where to invest next. 

Finnovating can help you connect with many investment opportunities by bringing you directly into the FinTech ecosystem. The Discovery tool connects you to the world’s largest FinTech database of startups, corporations, and investors, with over 50,000 opportunities for collaboration between corporations, FinTech, and investors.