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FinTech in IPO Markets: An Analysis of FinTech IPOs (Q1 2020–Q3 2021)

Prove
January 13, 2022

FinTechs have clearly joined the IPO and Unicorn rush. Over the past few years, digital platforms have evolved into market leaders. The COVID-19 pandemic has only propelled the evolution by making them ripe for entry into the public market. In this article, we explore the FinTech IPOs and trends over the past year and a half. 

High consumer and investor confidence has led to a spike in FinTech IPOs. The past three and a half years saw more than 510 mega investments, with an astonishing 40% of the mega investments over the past eight months alone. FinTechs are not merely providing better and more customized offerings compared to incumbents; they have emerged as leaders in the financial ecosystem and are helping build the financial industry of tomorrow.

From January 2020 to date, 93 FinTechs have gone public. In 2021, 62 FinTechs took the IPO route to the public market, twice as many as last year (31). Here are the key insights:

  • FinTech IPOs doubled in Q1 2021 compared to Q4 2020.
     
  • 24 FinTechs went public in Q2 2021.
     
  • Coinbase, UiPath, Robinhood, Marqeta, Affirm, Bright Health Group, Wise, SentinelOne, and SoFi were some FinTechs that planned to go public and were successful.

A majority of the FinTechs that took the IPO route were from the Lending, InsurTech, Payments, and WealthTech segments. Upstart, a consumer lending platform that went public in 2021, is one of the success stories. The company raised $240 million by issuing 9 million shares at $20 per share, valued at $1.7 billion. Since then, the company stock value has risen 15 times ($300 to date), and the valuation has increased to $23 billion.

Another interesting finding is that 6 of 16 companies in the lending sector that went public had BNPL offerings. Over the past 3–5 years, BNPL offerings have gained much traction as they have fueled online purchases. Several Australia-based consumer lending companies have taken the direct public offering route to raise funds from public markets instead of private investors and venture capital units. 

BNPL platform valuations have also increased by at least 5–10 times, including those of public and private firms. Afterpay, for instance, was listed on the Australian Stock Exchange in 2017. The stock value grew steadily until Q1 2020, after which the stock value increased 10 times. Sweden-based BNPL provider Klarna saw its valuation increase by eight times post January 2020. The company raised $200 million in January 2020 at a valuation of $5.5 billion. Since then, its valuation has increased 8 times to reach $45.6 billion. US-based BNPL provider Affirm went public in January 2021, and its valuation doubled the day it was listed; its valuation has increased by five times since 2020.

InsurTech ranks second among FinTech IPOs. Of the 15 FinTechs that went public, 10 were Unicorns. Of these, 10 (FinTechs) are based in the US, and the rest are based out of China and Israel. Bright Health Group, one of the world's most valuable InsurTech companies, raised $924 million by selling 53 million shares at a price of $18 per share in its IPO. Bright Health Group, Oscar Health, Clover Health, Root Insurance, Hippo Insurance, Lemonade, and Metromile are some major InsurTechs that went public.

Payments ranked third in FinTech IPOs. 5 of the 13 payment FinTechs that filed for an IPO were Unicorns. US-based modern card issuing and processing company Marqeta raised the highest fund of $1.2 billion by issuing 45.45 million shares at $27 per share at a valuation of $16 billion. Marqeta, dLocal, Nuvei, Paya, Lightspeed POS, and Paysafe were some of the notable payments FinTechs that went public.

As per our analysis, the US, UK, China, Australia, and Canada were among the top 5 countries that led the FinTech IPOs list. US-based FinTechs (47) made up 50.5% of the total FinTech IPOs. UK-based FinTechs (11) secured second place, accounting for 11.8% of the total FinTech IPOs. China-based FinTechs (9) came in third, accounting for 10% of all FinTech IPOs.

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