FinTech firms come in all shapes and sizes, and the past few years have witnessed a steady stream of venture capital or VC funding across the FinTech industry. A number of key trends are fueling investment in this space, including rapid innovations in FinTech infrastructure, FinTech companies embedding themselves within specific verticals and platforms, the unbundling and re-bundling of financial services offerings, the rise of challenger banks, and the increasing level of FinTech valuations.
This year and beyond, entrepreneurial and investor activity is likely to center on the infrastructure and middleware layers of the FinTech ecosystem, which are enabling players to converge product categories and business models across the consumer FinTech landscape.
FinTech Companies 2020: The Top Venture Capitalists
Venture capitalists provide asset funding to emerging organizations that show solid growth, sometimes assisting these companies with useful advice, connecting them with influential people, and helping them to effectively establish their internal processes. In return, VC investors get an ownership stake in the company, and will often have a say in making vital company decisions.
The top venture capital firms providing investment for FinTech in the US include:
FinTech Collective: Since its establishment in 2012, the firm has funded more than 30 successful startups, and works with such organizations globally at all stages of fundraising. FinTech Collective funds startups whose focus is on wealth and asset management, banking, lending, payments, insurance, alternative lending, Bitcoin, Blockchain, and Cyber investments. The list of FinTech companies that have benefited from FinTech Collective funding includes MoneyLion, Anyfin, Embroker, and Contabilizei.
Cota Capital: Based in San Francisco, Cota Capital was founded in 2014, and deals with startups at all fundraising stages, from seed to C round. Startups dealing with cloud computing, big data, Blockchain, and international payments are Cota Capital’s main focus. The company has assisted Cloud Lending, Seed, Boomtrain, and Zeta.
Blockchain Capital: Established in 2013, Blockchain Capital funds early-stage and late-stage startups in the blockchain arena, and is currently supporting more than 80 projects in the financial sector. FinTech startups are most eligible for Blockchain Capital funding deal with Blockchain, risk management, Cyber investments, business/corporate banking, and payments. Bison Trails, TRM Labs, Securitize, and OpenSea are among the many who have benefited from their VC funding.
Foundation Capital: New York-based Foundation Capital was set up in 2016, and has since funded more than 50 financial startups. Foundation Capital provides funding only at the seed stage, aiming to assist ambitious startups with short-term prospects. This includes startups whose focus is on financial management solutions, alternative lending, payments, and transaction monitoring. Nextview, Camber Creek, Lerer Hippeau, and others are among the beneficiaries of Foundation Capital funding.
America’s Biggest Financial Technology Companies
Following a boom for FinTech startups in 2019, America’s largest FinTech companies have been getting bigger. The average valuation of the ten most valuable FinTech operators in the US currently stands at $9 billion. The organizations in question are:
Stripe: Valued at $35 billion, the Stripe software platform enables businesses to accept online payments. The company recently launched a new corporate credit card and small business loan scheme but also counts Amazon and Facebook among its customer base.
Ripple: With a valuation of $10 billion as of February 2020, Ripple facilitates international payments, and issues a cryptocurrency called XRP, which was created by its founders. Standard Chartered and Santander are among Ripple’s 300 institutional clients, and in 2019, the company sold $500 million worth of XRP.
Coinbase: The cryptocurrency Coinbase has expanded to offer crypto custodial services to institutions, and a personal wallet and new currencies designed with privacy in mind. Coinbase is currently valued at around $8.1 billion.
Robinhood: With a current value of around $7.6 billion, the mobile app Robinhood offers commission-free trading of stocks, ETFs, options, and cryptocurrencies. Robinhood recently launched a “cash management” feature, which pays 1.8% interest on uninvested money in your brokerage account.
Chime: Valued at $5.8 billion, the mobile-only neo-bank Chime offers no-fee checking accounts, a debit card, fee-free overdraft protection of up to $100, and access to paychecks up to two days early. For checking, Chime gives users the option to automatically round up purchases and deposit the change into their savings accounts.
Plaid: With a $5.3 billion valuation, Plaid connects payment apps like Square Cash, and personal finance apps such as Acorns to a user’s bank account, and enables customers to transfer and track their funds. Plaid recently expanded its coverage to the UK, Spain, France, and Ireland.
SoFi: Starting life as a student loan refinancing operation, SoFi now has over 900,000 members, and offers many financial services, including personal loans, mortgages, insurance, checking accounts, savings, and investing. Its current value is around $4.8 billion.
Credit Karma: Free credit monitoring and credit score service Credit Karma has expanded to offer free online tax filing and high-yield savings accounts. The company earns referral fees from customers who follow up on its recommendations for credit cards, personal, home, and auto loans, or auto insurance, and is currently valued at around $4 billion.
Opendoor: Real estate FinTech Opendoor has a value of around $3.8 billion, and enables home sellers in 21 cities to request all-cash offers online, receive bids in 24 hours, and close on sales in as little as two weeks. Opendoor recently launched an app that enables buyers to schedule self-guided tours and make offers on any home for sale in six cities, including Dallas and Phoenix.
Root: Auto insurance FinTech Root employs a smartphone app that measures 200 variables, to assess customers and set their insurance rates. Valued at $3.7 billion, the company recently expanded to offer renters’ insurance, covering property stolen from a customer’s car, apartment, or hotel room.
What Are the Best FinTech Companies?
As of May 2020, the world’s top FinTech companies include the following:
Ant Financial: An offshoot of the Alibaba Group and the backbone for financial services such as Alipay, Ant Fortune, and Ant Financial Cloud, Ant Financial had a 2018 market valuation of $150 billion. Ant Financial and its affiliates offer services in wealth management, credit reporting, private banking, payments, and cloud computing.
Adyen: From its base in the Netherlands, Adyen serves over 4,500 businesses, processing mobile, online, and in-store payments from a single platform that enables clients to accept payments through any sales channel, anywhere in the world. Those clients include Facebook, Uber, Netflix, Spotify, L’Oréal, Burberry, Symantec, and Microsoft.
Qudian: China’s Qudian operates as a micro-loan site, installment payment site, and investment management platform, specializing in small loans to Chinese consumers. The company has forged partnerships with several eCommerce firms, digital service providers, and financial services, in an effort to attract more customers.
Xero: New Zealand-based Software as a Service (SaaS) provider Xero develops online accounting software for small businesses, with a product range that includes a full accrual accounting system with cashbook, automated daily bank feeds, invoicing, debtors, creditors, sales tax, and reporting.
SoFi: One of America’s top ten FinTech companies, SoFi has a portfolio that offers student loan refinancing, mortgage loans, personal loans, wealth management, and life insurance. It’s Stock Bits offering enables consumers to buy and sell fractional shares of 50 popular stocks, for as little as $1.
Lufax: Based in China, Lufax started as a peer-to-peer lending company, matching small businesses and individuals with investors for a fee. The company now uses its expertise in big data and information technologies to focus on wealth management, risk management, and consulting services.
Avant: Chicago-based Avant is an online lending platform targeting middle-income consumers. The company’s proprietary software rates the creditworthiness of candidates for unsecured personal loans and credit cards, with interest rates ranging from under 10% to 36%. Avant currently serves more than 800,000 customers.
ZhongAn: China’s ZhongAn is an exclusively online insurance company founded in 2013, which acquired 150 million clients and wrote 630 million insurance policies, during its first year of operations. The company went public on the Hong Kong Stock Exchange in mid-2017.
Klarna: Sweden’s Klarna is one of Europe’s largest banks, with a user interface that’s based on an online shopping platform. Klarna uses its proprietary software to evaluate consumers’ creditworthiness at the moment of purchase and makes money by charging merchants a small transaction fee, and by charging users who opt into its installment payment plan.
Oscar: Health insurance FinTech giant Oscar is backed by Fidelity, Google Capital, Khosla Ventures, and other prominent investors. Oscar uses technology to simplify the health insurance stream and to provide a more transparent and faster medical claims process, at a reasonable cost.
The top venture capital firms providing investment for FinTech in the US include: FinTech Collective. Cota Capital. Cota Capital. Foundation Capital. The average valuation of the ten most valuable FinTech operators in the US currently stands at $9 billion. These companies are: Stripe. Ripple. Coinbase. Robinhood. Chime. Plaid. SoFi. Credit Karma. Opendoor. Root.