Rising interest rates have crushed high-growth tech stock valuations in 2022, and most of the high-profile fintech IPOs of recent years are now trading well off their post-IPO highs. On Wednesday, DataTrek Research co-founder Jessica Rabe said fintech startups are now relying heavily on private financing.

Coinbase Global Inc COIN , SoFi Technologies Inc SOFI and Robinhood Markets Inc HOOD were three of the highest-profile fintech IPOs of 2021. At this point, the three stocks are down 86.5%, 74.2% and 66.9%, respectively, in the past year.

"With high-profile IPOs from last year well below their peaks (i.e. Coinbase, Robinhood and SoFi), the IPO window for fintechs is essentially closed," Rabe said.

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The Numbers: The financial services sector raised $131 billion in venture funding in 2021, more than any other group. While fintech venture capital funding has declined each quarter so far in 2022, Rabe said it remains a popular investment area for VC firms. So far this year, financial services firms have raised $56.2 billion in funding, well above full-year totals in 2020 ($34.2 billion), 2019 ($34.9 billion) and 2018 ($52.6 billion).

In 2022, high-profile fintech companies are no longer choosing to go public to raise capital. For example, the "buy now, pay later" company Klarna raised $800 million in July in a private funding round led by Sequoia, Silver Lake, and Commonwealth Bank of Australia.

"Fintech and financial services startups have been hit by a difficult macroeconomic backdrop just like many other categories, but it continues to stand out as one of VCs favorite sectors to back," Rabe said.

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Despite the recent valuation hiccup, Rabe said VC investors realize fintech companies still have long-term opportunities to disrupt the traditional financial sector in a similar way that e-commerce companies disrupted the department store industry.

Benzinga's Take: It may be a while before the average retail investor gets a crack at another round of high-profile fintech IPOs now that the 2021 IPO wave has died down. In the meantime, investors can stay up-to-date on the most cutting edge fintech startups by attending the Benzinga Fintech Deal Day event in New York City on Dec. 8.

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