VENTURE CAPITALIST: Fintech is about to go ‘pear-shaped’

Financial technology is a bubble and investors are chasing illusory returns, according to Mark Tluszcz, CEO of Mangrove Capital and the first investor in Skype.

“All the bad habits of humans, when money gets involved, will be exhibited in fintech in the next few years,” said Tluszcz in an interview in London.

Tluszcz, whose Luxembourg-based Mangrove invests in tech startups, said that fintech firms that target peer-to-peer lending are too small and don’t have the expertise to take on the banks.

He also echoed comments from former Financial Services Authority Chairman Adair Turner who warned of “big losses” for savers who put their money into lending products, leading to a loss of confidence in the sector.

“P2P lending will go pear-shaped,” Tluszcz said. “People underestimate the psychological barrier of handing over your money, you’ve worked hard for it, and trusting it to someone else.”

Meanwhile, the fintech startups that target areas such as payments and remittances just don’t make enough money to warrant high valuations.

“Investors have poured so much money into this but they have been doing it blindly,” said Tluszcz. “The proof of the pudding is you’re hardly seeing any exits. I couldn’t care less what you say it’s worth, there are no exits.”

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