Why the Next Decade of FinTech Belongs to Infrastructure Builders

For the better part of a decade, venture capital
chased the consumer FinTech layer. Neobanks.
Buy-now-pay-later. Digital wallets. The promise
was compelling: millions of underbanked consumers,
low switching costs, and a generation that had grown
up expecting financial services to feel like Spotify.

The problem is that promise largely delivered — and
the market is now saturated. Margins are thin,
customer acquisition costs are climbing, and
differentiation has become nearly impossible at
the product level.

The opportunity now sits one layer down.

Where the Durable Businesses Are Being Built

Infrastructure is where the real value is being
created. The payment rails that process trillions
annually. The compliance engines that every regulated
entity must license. The API layers that every
neobank, every embedded finance product, and every
crypto application runs on top of. These are not
glamorous businesses. They are essential ones — and
essential businesses become category-defining ones.

The infrastructure layer has three characteristics
that make it structurally superior to consumer
FinTech. First, switching costs are extraordinarily
high once a customer is embedded. Second, the sales
cycle is long but the contract value is large and
recurring. Third, the regulatory moat grows over
time rather than eroding — compliance complexity
favors incumbents who have already solved it.

What We Look for in Infrastructure Bets

We've made three infrastructure bets in the last
18 months. Each targets a different segment of the
stack: settlement infrastructure, compliance
automation, and banking-as-a-service middleware.
The thesis across all three is the same — build
the rails, and everyone else pays the toll.

When evaluating infrastructure businesses we focus
on four things. How deeply embedded is the product
in its customers' operations? What is the cost of
switching, both financially and operationally? Is
the regulatory environment creating a moat or a
ceiling? And does the team have the patience for
a long sales cycle and a longer compounding curve?

The Next Decade Belongs to the Builders

The next decade of FinTech will be won by companies
that most investors are currently ignoring. That is
precisely why we find it interesting. When everyone
is looking at the consumer layer, the infrastructure
layer is being built quietly by founders who
understand that the most valuable position in any
market is the one everything else depends on.

The toll road analogy is not an accident. The best
infrastructure businesses do not need to win every
customer in their market. They need to become the
layer that every other participant has no practical
choice but to use. That is a fundamentally different
business than a consumer app competing on features
and marketing spend.

We are in the early innings of this shift. The
founders building it today will look obvious in
ten years. They do not look obvious right now.
That asymmetry is the opportunity.