The Seven Biggest FinTech Stories of 2021

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From astronomical startup valuations to the NFT frenzy, here are the seven most important fintech stories of 2021.

1. The valuations of fintech startups are going crazy

In 2021, fintech valuations have become difficult to understand. The most striking illustration has been the number of startups that have experienced huge valuation jumps in six months or less. Payroll startup Deel hit $ 1.3 billion in April, then $ 5.5 billion in October. Ramp credit card company has grown from $ 1.6 billion to $ 3.9 billion over a similar period. Online cashier startup Bolt raised $ 4 billion in funds in July, announcement a $ 6 billion valuation three months later was looking for $ 11 billion just three weeks later (which he would have achieved) and then looking for $ 14 billion soon after.

Frank Rotman, co-founder and partner of fintech venture capital firm QED, attempted to make sense of the wacky market in a series of tweets in July. He highlighted a few key factors, including a deluge of cash flowing into venture capital, sparkling public markets creating very high venture capital returns, and start-up founders “fueling FOMO” with hyperbolic growth forecasts.

In three quarters of 2021, fintech funding for the year reached $ 91.5 billion, almost double the total for all of 2020, according to CB Insights. In the third quarter, one in three newly created unicorns was a fintech startup.

2. Fintechs are flocking to public markets

As the stock market continued to climb this year, fintech companies large and small have rushed to go public. Digital bank MoneyLion, payments company Payoneer, and homeowners’ insurer Hippo have gone public through mergers with PSPC, the investment vehicle that involves a fictitious “blank check” entity going public in the goal of later acquiring a private company to make it public. Bigger names like Robinhood, Affirm, and Marqeta have achieved traditional IPOs. FinTech exits (including not only IPOs and PSPC mergers, but acquisitions by other companies) hit an all-time high, reaching 723 at the end of the third quarter, 25% higher than the set of 2020, reports CB Insights. The glow in equities has faded over the last few months of 2021. Almost all of the newly public fintechs are down from their highs at the start of the year.

3. The never-ending increase in buy now, pay later

The trend to pay for purchases in two-week installments rather than using revolving credit card debt has continued to grow. In 2019, 17% of Millennials had used a Buy-It-Now and Pay-On-Pay service. This year, that metric reached 41%, according to market research from Cornerstone Advisors.

All large buy-now and late-pay businesses are rising with the tide. Affirm had a historic IPO in January, and the number of its active U.S. clients grew from 3.9 million in fall 2020 to 8.7 million a year later. PayPal launched its own Buy It Now and Payout product later in August 2020, and after 13 months, 9.5 million people had tried it. Stockholm-based Klarna reached 90 million active users worldwide in 2021 and has raised funds at a valuation of $ 46 billion. And Square has announced that it will acquire Australian company Afterpay for $ 29 billion in August. This surprising move demonstrated that Square’s Cash app, like PayPal, has the ambition to become a financial “super app” or a one-stop-shop for people’s personal financial needs.

4. NFTs are becoming the next big thing

Non-fungible tokens (NFTs) – computer files used to track ownership of unique digital assets like art and music on a ledger known as blockchain – have become one of the most popular financial products. vogue of 2021. In March, artist Beeple sold a piece for $ 69 million. Celebrities ranging from Snoop Dogg to Martha Stewart have started promoting NFTs. In August, the NFT OpenSea marketplace processed a record $ 3.4 billion in transactions, recording approximately $ 85 million in revenue in a month its spend was likely less than $ 5 million. The four-year-old startup is in talks to raise new funds at a valuation of $ 10 billion, which would turn the two co-founders into billionaires. Now every leading crypto investor is obsessed with NFTs, and many believe tokens will transform everything from music to real estate.

5. The plaid escapes Visa

In early 2020, just before Covid hit the United States hard, Visa announced plans to acquire Plaid, which helps fintech apps connect to consumers’ bank accounts, for $ 5.3 billion. The deal came at a time when large IPOs and fintech exits were rare, and it was seen as a big win for fintech. But as lockdowns were put in place, Plaid customers saw an increase in demand. Robinhood, Coinbase, digital bank Chime and Affirm saw record growth, and Plaid’s business grew at the same pace.

Towards the end of the year, the $ 5.3 billion price tag didn’t finally look so good, and in November, the Justice Department announced it was suing Visa to block the deal. Both companies canceled it a few months later. “We are confident that we would have prevailed in court because Plaid’s capabilities are complementary to Visa’s, not competitive,” Visa said at the time. “Waiting a year or more of regulatory uncertainty didn’t seem like the right decision,” Perret said Forbes. Just three months after its failure, Plaid has raised funds at a valuation of $ 13.4 billion, turning its co-founders into billionaires.

6. Robinhood traders form a movement

In January, customers of Robinhood and other online traders came together around a common mission: to make money by driving the price of GameStop up through the roof. Gathered on the Reddit Wall Street Bets forum, they vowed to go to war with hedge funds like Melvin Capital that shorted GameStop, or place bets that would only pay off if GameStop lost value. The ploy worked: As Robinhood traders massively bought stocks and options in GameStop, its share price rose from $ 18 on January 7 to $ 348 on January 27. He caused nearly $ 20 billion in market value losses for Wall Street investors, and he came to symbolize the resentment of the little Wall Street guy. Robinhood traders have rolled out the same strategy with other public companies like the AMC theater chain and Blackberry, pulling the battered stocks up to wild valuations.

The episode prompted Robinhood to temporarily limit trading on GameStop, AMC and Blackberry, a move that angered users, and to raise $ 3.4 billion in emergency funding to meet the capital needs of the clearing house. In mid-December 2021, GameStop was trading around $ 150 per share, up about 700% year-on-year. AMC grew almost 1,250%, while Blackberry grew only 40%.

7. Coinbase goes public and reveals huge profitability

For years, top financial services executives like Jamie Dimon doubted cryptocurrencies would deliver lasting value. Coinbase’s public debut in April was a major step in the industry’s path to building mainstream credibility. In a regulatory filing for its public listing, Coinbase revealed that it made $ 320 million in net profit on $ 1.1 billion in revenue in 2020. Such profitability is highly unusual for a fast-growing startup that doesn’t is only 10 years old. The company reached a valuation of $ 86 billion on the first day of trading, but has since fallen to around $ 70 billion.

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