May 21, 2018
The FinTech narrative has certainly evolved from disruption to collaboration. With the increasing incumbent activity through bank-FinTech partnerships, acquisitions, as well as growing VC funding, the global FinTech market has been maturing over the period. The recent years have been really exciting for venture capitalists around the world with major FinTech investments in their portfolio, as there has been a wave of FinTech IPOs in the past three years. With the growing valuation, market traction, and customer adoption, FinTech startups are now looking to go public.
Since 2008, there have been 60 FinTech startups (founded after 2007) who have filed for an IPO and gone public. What is most interesting in this statistic is that over 50% of these IPOs have been filed post-2016.
Among the 60 FinTech IPOs by companies founded post-2007, Lending startups top the charts with 16 of them filing for IPO in the past 10 years. Some of the most notable IPOs are by OnDeck and Lending Club. A total of 8 of these IPOs were filed in the past 17 months, with some of the recent ones being TruFin (UK), Diannu98 (China), LexisFinTech (China), PPDAI (China), Credible (US), etc. Interestingly, five of these eight IPOs were being filed by Chinese lending startups, indicating the fact that the much-talked-about tech-IPO wave in China has rubbed on to FinTech as well – more specifically to Lending.
Nine payment startups filed for IPOs in the past 10 years. While none of these IPOs have been filed in 2018 (yet), Swedish payment startup iZettle is all set for an IPO in the coming few days. Also, PayPal has announced the acquisition of iZettle for $2.2 billion in an all-cash deal. Acquisition as well as an IPO – a busy month for iZettle further shows good signs for the maturing of the FinTech landscape.
The US leads the chart with as many as 21 FinTech IPOs in the past decade. China is second on the list with 9 IPOs, out of which 6 were filed in the past 17-18 months; this means China is not just catching up, but it also has its foot firmly planted on the pedal and can be expected to produce more such IPOs in the next couple of years.
The average time to IPO for these FinTech startups (founded post-2007) is 4.28 years. Blockchain startups have the lowest average time to IPO (1 year) calculated across 2 IPOs. The startups from RegTech (2.3 years), Insurance (2.5 years) and Cryptocurrency (3 years) space have very low average time to IPO. On the other hand, segments such as WealthTech (5.8 years) and B2B FinTech (5.6 years) have a significantly higher average time to IPO.
Certainly, these statistics do paint a pretty picture for the current state of FinTech across the globe. Currently, there are more than 30 FinTech unicorns with over $1 billion in valuation. Some of them have given clear indications of their intentions to go public (e.g. Funding Circle). Some of the major FinTech Unicorns such as Credit Karma, Stripe, Palantir, and SoFi are expected to be the closest to filing for an IPO in the next one to two years. While these companies prepare for their primary market exits through IPOs and the recently public FinTechs prepare their filing documents, it will be interesting to see how the investors and customers will respond as they get a clear look into the financials and growth projections of these FinTechs. Will the quantification of innovation in terms of numbers and profits hamper their impact or will it pave way for newer disruptions? We will stay tuned to find out. Nonetheless, as the cliche goes – these are exciting times for FinTech startups, enthusiasts, investors as well as incumbents.