FinTech reaches a tipping point – and a spate of IPOs may be just the beginning
April 29, 2021

FinTech reaches a tipping point – and a spate of IPOs may be just the beginning

Forge Team

Coinbase has been the talk of the town recently, with the company going public via direct listing on April 14 with a valuation of nearly $100 billion. On the day of its debut, Chainalysis Chief Economist Phillip Gradwell told the Exchange that “Coinbase’s $100 billion valuation today demonstrates that venture investors can make great returns from putting money into crypto companies, not just cryptocurrencies. That proof point is good for the entire ecosystem.” [1]

Crypto companies are a subset (albeit a large subset) of businesses catapulting financial technology into the spotlight. Not only will we continue to see more FinTech innovation from behemoths and start-ups alike, but the transformative technology being introduced to the market will support and challenge traditional banks and other legacy financial institutions in their efforts to modernize their systems and applications – all at a greater speed.

The FinTech catalyst

Financial technology has been the beneficiary of a massive amount of investment since the 2008 stock market crash that precipitated a rash of new regulations on banks. The products, services and apps that have come to market since then have filled a void, providing new tools and resources to improve financial literacy, and help the masses gain and maintain financial wellness.

Fast forward to today, and FinTech isn’t just a buzzword – it’s embedded into our everyday lives. There’s trading app Robinhood, which will likely reach a $50 billion valuation with its recent funding rounds [2], and Plaid, an infrastructure provider that helps other financial services apps connect to consumer bank accounts. These are just two of a class of companies democratizing the investment paradigm and enabling even more innovation within the financial industry – increasingly across other sectors as well.

The challenges addressed –and the opportunities created –by FinTech innovators has catapulted investor interest to the next level. In 2020, the FinTech industry saw over $182B in capital invested, and just a few months into 2021 has seen over $75B invested. [3] Online payments provider Stripe raised $600 million in March, valuing the company at $95 billion, almost three times its $36 billion valuation from April 2020. Meanwhile Affirm, the leader in the buy-now-pay-later sector, went public in January, quickly reaching a $24 billion valuation. [4]

Seize the opportunity

This sharp uptick in FinTech investment has created an opportunity for traditional financial institutions to partner with these organizations to optimize their current processes and digitally transform to better meet the wants and needs of their customers. Take payment processing for example. By leveraging blockchain technology, banks will soon be able to validate financial transactions in real-time versus the current three-day standard.

The growing herd of FinTech unicorns and newly public entities are an integral component in streamlining outdated systems. Investors getting involved now will be part of solving today’s financial challenges and creating new opportunities for not only every business, but every individual.

Find the next unicorn on the Forge marketplace.

[1] TechCrunch: Coinbase’s direct listing alters the landscape for FinTech and crypto startups

[2] Fortune: Everything we know so far about Robinhood’s path to an unusual IPO

[3] PitchBook data

[4] NASDAQ: Investors, Take Notice: The Fintech Bonanza Is Here To Stay

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PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

The information and material presented in this article is provided for your informational purposes only and does not constitute an offer by Forge Global, Inc. Forge Securities LLC or any of its affiliates (collectively, "Forge") to sell, or a solicitation of an offer to buy any securities and may not be used or relied upon in connection with any offer or sale of securities. An offer or solicitation can be made only through the delivery of final offering document(s) and purchase agreement and will be subject to the terms and conditions and risks delivered in such documents.

This article does not constitute an offer to provide investment advice or service. Registered representatives of Forge Securities LLC do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services. Securities referenced in this article may be offered by Forge Securities LLC, member FINRA/SIPC.

Forge Securities LLC is a wholly owned subsidiary of Forge Global, Inc. Certain affiliates may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice. Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.