Is a Fintech Comeback Brewing?...A Slow August for Investors...Zuckerberg Regrets His Regrets
Plus, OpenAI's new 'reasoning' models
The Main Item
VCs Map Out A Fintech Comeback As AI Dominates the Conversation at the NYC Summit
Primary’s New York City Summit provides an annual temperature-check on how venture capitalists, especially New York-based VCs, are feeling.
As you might expect, artificial intelligence loomed large. No surprise there.
But there were glimmers of opportunity outside of AI.
Notably, esteemed fintech investor Matt Harris, who had basically given up making substantial fintech investments over the past four years, said he’s back at it. He cut a meaningful check this year, he said. The round hasn’t been announced.
Harris, a partner at Bain Capital Ventures, said he’s optimistic about companies building around stable coins and real world assets.1 (The Wall Street Journal just reported this week that Tether is more profitable than BlackRock.)
Meanwhile, fintech heavy hitters Oak HC/FT’s Annie Lamont and a16z’s Angela Strange offered other areas of fintech opportunity. Lamont shouted out AI accounting startup Black Ore as an example of a tool that’s automating tax prep for accountants, taking processes that used to take weeks to finalize down to a few minutes. (Oak HC/FT and a16z have both invested.)
AI-powered financial technology companies are gunning for rote tasks. “A lot of these white collar jobs are going to become co-piloter agents,” Strange said.
And if the past few years of fintech have been about neobanks and other disruptive approaches to finance, now “compliance is, all of a sudden a hot, new, sexy AI space,” Strange said.
“We look at a lot of insurance,” Strange said. “They have millions of people that ingest PDFs, read PDFs, key them into the system—your new software system can do that.”
The panelists blamed firms like SoftBank and Tiger Global for driving up fintech valuations, creating the perfect environment for a crash when interest rates climbed. But the venture capitalists also noted that compliance had proven much tougher than many VCs expected. (Regulators have been scrutinizing the banks that power many fintech services and some fintech services themselves.)
Of course, you should take all this newfound fintech enthusiasm with a big grain of salt. Three fintech VCs telling you that fintech is going to mount a comeback — certainly they’re talking their books and they admitted as much on stage.
But the conversation did feel like a real turning point with Harris, who is generally happy to be a voice of skepticism, saying that he’s feeling more optimistic.
“This is probably the most active year we’ve had in a couple of years in fintech,” Lamont told the crowd.
AI for Enterprises
Financial services was just one of the big industry verticals where the promise of AI looms large. Primary general partner Brad Svrluga kicked off the day joking that this summit was “the antidote to Silicon Valley,” where the focus is often the tech more than the applications, and the day was full of discussions about how businesses of all stripes, from banks to healthcare providers, were starting to integrate AI tools.
Even as OpenAI’s first “reasoning” models, dubbed o1, became a hot topic Thursday, most of the conversation around generative AI felt sober and practical.
Researcher Ion Stoica, who’s also a co-founder and executive chairman of both Databricks and Anyscale, argued that many foundation models had become relatively interchangeable in terms of their capabilities, and any that had a head-start could lose it in a matter of months.
Cockroach Lab’s Spencer Kimball agreed with several other speakers that coding assistants, which we wrote about last week, are a clear winner as a category, though it’s too early to say which companies will prevail. “These things change very rapidly,” Kimball said of the technical improvements in AI coding applications.
We heard chatter of yet another coding assistant startup raising during the summit.
Dev Ittycheria, MongoDB’s CEO, was bullish on AI long-term but said that most of his enterprise customers were still in the experimentation stage of AI adoption. “There’s a lot of interest in AI as a means to an end rather than an end unto itself,” he said.
Silicon Valley Politics
The most fiery conversations of the day, though, were around politics.
Prolific investor and vocal Trump supporter Keith Rabois called the Biden administration “pro-Hamas” during his conversation with Forbes’ Alex Konrad, and accused it and university leaders of anti-semitism for their response to Israel/Hamas war protests.
While Rabois didn’t back away from his convictions, he reflected that he probably spends too much time sharing his takes on Twitter/X, all things considered. “I’m the CEO of a company. I’m a very active investor. Typically, I think nine of the last 11 years maybe, I’ve probably led more new investments than any other VC per year, and so I serve on like 15, 20 boards….so allocating time to Twitter probably is a mistake, at least at the margin.”
Despite his political differences with his boss Vinod Khosla, a strong supporter of Kamala Harris, Rabois said: “Vinod and I actually agree on a lot of things, like the threat posed by China. He thinks China, the CCP, poses an existential threat to the way of life here in the United States, which is something I care a lot about.”
Stoica also warned of Chinese AI advancement, noting that while China is still catching up to the US in AI, developers there have access to mountains of citizen data that the government can make available.
Headliner Nate Silver told Svrluga that the election was too close to call, according to his model. But he shared his fears around Big Tech domination in AI.
“This is a technology that probably disproportionately rewards the powerful, because you need so much compute… that’s a big reversal and something I think we need to think about quite carefully,” he said. “I’m a big believer in decentralization and competition… I think we want to adapt those ideas for this kind of scary, changing, brave new world.”
Eric joined investor Shomik Dutta and advocate Daniella Ballou-Aares on stage in observing that democracy, and the rule of law, are all but essential for startups and investors. “Is your responsibility just to advocate for your very narrow interest at all costs, or are you seeking to build a better system that will be better for your business over the long term?” Ballou-Aares asked during a discussion of how VCs should think about policy this year.