December 2, 2019
If you were asked to mention one sector that has evolved rapidly, you would surely mention FinTech among your top three segments. The FinTech story has evolved from disruption to collaboration. And in our previous articles, we have been emphasizing on various bank-FinTech partnerships, acquisitions as well as the VC/PE funding taking place in this ecosystem. Over the past few years, venture capitalists have been really excited with FinTech companies being a part of their portfolio, as there has been a wave of FinTech IPOs in the past five years. This can be credited to their growing valuation, market traction, and customer adoption that is resulting in FinTech startups looking to go public.
Since 2008, there have been 94 FinTech startups (founded after 2007) that have filed for an IPO and went public. What is most interesting in this statistic is that over 60% of these IPOs have been filed post-2015.
Among the 94 FinTech IPOs by companies founded post-2007, Lending startups top the charts with 22 of them filing for IPO in the past 11 years. Some of the most notable IPOs are by OnDeck, FriendsClear, and Funding Circle. A total of 16 of these IPOs were filed in the past 24 months, with some of the recent ones being Carvana (US), Credible (US), Funding Circle (UK), PPDAI (China), Prospa (Australia), 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 – and more specifically on to Lending.
A total of 17 payment startups filed for IPOs over the past 11 years. This year, Finablr launched its IPO, which was initially a group of individual companies such as UAE Exchange, Unimoni, Travelex, Swych, etc. Other notable companies that filed for IPOs in this segment include Boku (USA), Novatti (Australia), Square (US), and Raiz Invest (Australia).
The US leads the chart with as many as 26 FinTech IPOs over the past 11 years. China is second on the list with 17 IPOs, out of which 10 were filed in 2018 and 2019; 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 get to the IPO stage for these FinTech startups (founded post-2007) is 4.55 years. Blockchain startups have the lowest average time to IPO (2 years) calculated across 2 IPOs. The startups from B2B FinTech (3.2 years), Payments (3.8 years), InsurTech (3.8 years), and BankingTech (4 years) space have a very low average time to IPO. On the other hand, segments such as Prepaid Cards (11 years) and Cybersecurity (8 years) have a significantly higher average time to get to the IPO.
Certainly, these statistics do paint a pretty picture of the current state of FinTech across the globe. Currently, there are more than 55 FinTech unicorns with over $1 billion in valuation. Some of them have given clear indications of their intentions to go public (e.g., Klarna). Some of the major FinTech Unicorns, such as Lemonade, Credit Karma, and Robinhood, are expected to be the closest to filing for an IPO in the next one to two years. While these companies are preparing for their primary exits via IPOs and the recent public FinTechs are preparing their filing documents, it will be important to see how shareholders and customers will react as they get a clear look at the FinTechs ' financial and growth projections. Will quantifying innovation in terms of numbers and profits hamper its impact or pave the way for new disruptions? We're going to remain tuned to find out. Nonetheless, as the cliche suggests, these are exciting times for FinTech companies, fans, investors, and incumbents alike.