Cowboy Ventures
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Cowboy Ventures

What We’re Excited About: The Verticalization of B2B Fintech

By Jillian Williams

Selling financial products is not easy. Nor is shopping for financial products particularly exciting. Even when products or services could save time, money, and/or headaches, it’s expensive to convince skeptical customers to switch from existing services. Lack of trust, confusion, and cost to acquire can make the whole endeavor seem not worth it for either side.

Part of the problem is that most financial products were historically built as one-size-fits-all. In part, because building the products plus acquiring and serving the products was expensive — financial services companies built and sold the same product to a large public company as a small startup — be it a construction company, bakery, hospital, or anything in between. Despite each business’ unique needs, challenges, stakeholders, and capital flows, the financial services industry treated them as largely the same.

At Cowboy, we believe that each industry is unique. This creates the need for vertical-specific fintech solutions and the opportunity for end-to-end SaaS solutions to solve those needs — the Verticalization of Fintech.

More antiquated and complex verticals like construction, healthcare, and SMB have been left behind by technology yet are all ripe for software-enabled productivity and revenue increases, plus lower costs — making many verticals individually addressable markets worth building for. And the massive revenue potential of fintech products within each vertical makes the addressable markets even bigger.

What does the verticalization of SaaS look like?

First, a SaaS product that solves a critical vertical-specific problem is needed. The best vertical SaaS companies build on deep customer knowledge, solve a quantifiable pain point, deliver quick time to value, and over time become a trusted “system of record” embedded in daily or weekly business processes for key employees of a specific type of business. They are also often built by insiders with a unique perspective on a vertical’s inefficiencies and opportunities for improvement. These SaaS platforms become deeply integrated into businesses and get access to invaluable insights and data of a company.

In our view, the best vertical SaaS company will continue to build its offering upon this deep customer knowledge and data moat, and increasingly that product suite includes fintech products. Upselling financial products via vertical SaaS platforms circumvents the high friction and CAC that typically accompany fintech sales. For example, how does money move? Who are their customers? What does inventory look like? What is the payback cycle? With this data, companies can make smarter decisions about their customers’ product needs. Today, most of these SaaS companies start by offering a payments solution and often stop at working capital or invoice financing products. However, the types of fintech products offered can scale beyond that. This can include additional financing to businesses and end customers, credit cards, insurance, etc. There is flexibility based on what the customer needs and what each product could do from a revenue perspective for the SaaS business.

Adding fintech enables vertical SaaS companies to lower prices

Financial products are high-frequency and sticky. This can have a big impact on revenue potential — sometimes up to 8x versus the price of the software alone. The future potential revenue from fintech add-ons can enable software companies to lower the price of a vertical SaaS product or even make it free.

Toast and Shopify are model success stories in this space, both beginning as SaaS companies and increasingly developing into fintech companies. Based on their success, some SaaS companies planning to monetize through fintech are starting to add key fintech-experienced hires early on, given how massive the fintech revenue potential can become.

We see this trend expanding across multiple sectors. We are most excited about innovation in more “unsexy” industries traditionally overlooked or hard to reach by technology. These industries’ archaic frameworks and infrastructures, many stakeholders, and unstructured, wasted data pose some of the biggest challenges for technology to solve.

Below are examples of vertical SaaS companies monetizing through fintech:

Potential pitfalls

The SaaS-meets-fintech can be a great go-to-market strategy for fintech. But some potential pitfalls:

We are excited about vertical saas that will be a one-stop-shop for an industry monetized by fintech. These platforms require deep sector knowledge and often solve several challenges for businesses in one, growing to become effective systems of record for specific day-to-day workflows. This will be especially useful as businesses look to cut back on SaaS fragmentation across multiple vendors in the coming years.

If you are building or thinking about opportunities at the intersection of fintech and SaaS, we at Cowboy would love to chat with you. especially if you are an industry expert with a vision for a 10x better vertical SaaS approach in an unsexy industry. We love to be early partners from the idea stage and beyond with founders pursuing real, challenging, and meaningful problems. Feel free to reach out to me at



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A seed-stage focused technology fund backing exceptional founders.