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.

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1. Fintech Startup Valuation Goes Betray

In 2021, fintech valuations become difficult to fathom. The most striking example was the number of startups that saw huge valuations in six months or less. Payroll startup deals rose to $1.3 billion in April, then to $5.5 billion in October. The credit card company ramp grew from $1.6 billion to $3.9 billion in the same period. Online checkout startup Bolt raised $4 billion in July. announced Three months later had a valuation of $6 billion To ask $11 billion just three weeks later (which it allegedly Obtain) and then looking for $14 billion shortly thereafter.

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Frank Rotman, a cofounder and partner at fintech VC firm QED, tries to understand in a series of wacky markets Tweets In July. He pointed to a few key factors, including the influx of cash into venture capital, the public market creating sky-high venture capital returns, and startup founders “boosting FOMO” by predicting hyperbolic growth.

According to CB Insights, three-quarters through 2021, fintech funding for the year reached $91.5 billion, or nearly double the total from 2020. During the third quarter, one out of every three newly created unicorns was a fintech startup.

2. Fintechs Run in Public Markets

As the stock market continued to climb this year, fintech companies small and large went public. Digital bank MoneyLion went public through mergers with payments company Payoneer and homeowners insurer Hippo SPACs – investment vehicles consisting of a “blank check” shell entity, which would later take it public to a private company. Going public with the goal of achieving. Big names like Robinhood, Affirm and Marketa have outgrown traditional IPOs. Fintech exits (including not only IPOs and SPAC mergers but also acquisitions by other companies) reached 723 by the end of the third quarter, or 25% more than in 2020, according to a CB Insights report. Shares lost their luster in the last few months of 2021. Almost all new public fintechs are down from their peak at the start of this year.

3. Buy Now, Pay Later

Paying for purchases in two-week installments rather than using revolving credit card debt continued to grow. In 2019, 17% of Millennials used a Buy Now, Pay Later service. The measure took a 41% hit this year, according to market research from Cornerstone Advisors.

All the big buy-now, pay-later companies are rising with the tide. Affirm had a historic IPO in January, and grew its active US customers from 3.9 million in the fall of 2020 8.7 million One year later. PayPal launched its own buy-now, pay-later product in August 2020, and after 13 months, 9.5 million people tried it. Stockholm-based Klarna reached 90 million global active users in 2021 and raised funds at a valuation of $46 billion. And Square said it would acquire Australia-based Afterpay in August for $29 billion. The surprise move demonstrated that Square’s Cash App, like PayPal, has ambitions to become a financial “super app,” or a one-stop shop for people’s personal finance needs.

4. NFTs Become the Next Big Thing

Non-fungible tokens (NFTs) – computer files used to track ownership of unique digital assets such as art and music, known as blockchains – have become one of the most discussed financial products of 2021. In March, artist Beeple sold a piece for an astonishing $69 million. Celebrities from Snoop Dogg to Martha Stewart began promoting NFTs. In August, NFT marketplace OpenSea processed a record $3.4 billion in transactions, logging nearly $85 million in revenue a month, where it was expected to spend less than $5 million. The four-year-old startup is in talks to raise fresh funding at a valuation of $10 billion, which will turn both cofounders into billionaires. Now every top-tier crypto investor is paying attention to NFTs, and many believe that the token will transform every industry from music to real estate.

5. Released from the clutches of Plaid Visa

In early 2020, before Covid hit the US hard, Visa announced plans to acquire Plaid, which helps link fintech apps to consumers’ bank accounts, for $5.3 billion. The deal comes at a time when large fintech IPOs and exits were rare, and was seen as a huge win for fintechs. But as soon as the lockdown was imposed, customers of Plaid saw a boom in demand. Robinhood, Coinbase, digital banks Chime and Affirm experienced record growth, and Plaid’s business grew in lockstep.

Nearing the end of the year, the $5.3 billion price tag wasn’t looking so good, and in November, the Justice Department announced it was suing Visa to block the deal. After a few months both the companies closed it. “We believe we will have won on the court because Plaid’s capabilities complement Visa, not compete,” Visa said those days. “Waiting for another year or more of regulatory uncertainty didn’t feel like the right decision,” Perret said. Businesshala, Just three months after its fall, Plaid raised funds at a valuation of $13.4 billion, making its co-founders a billionaire.

6. Robinhood Traders Make a Movement

In January, Robinhood customers and other online merchants banded together with a common mission: to make money by driving GameStop’s stock price through the roof. Conducting on the Reddit forum Wall Street Bets, he vowed to go to war with hedge funds such as Melvin Capital, which were shorting Gamestop, or placing bets that would only pay off if Gamestop fell in value. The plan worked—as Robinhood traders collectively bought stocks and options at GameStop, its share price rose from $18 on January 7 to $348 on January 27. That caused nearly $20 billion in mark-to-market losses for Wall Street investors, and it came as a symbol of the displeasure of Wall Street’s little boy. Robinhood traders applied the same strategy with other public companies such as theater chain AMC and Blackberry, driving beaten-down stocks to wild valuations.

The episode caused Robinhood to temporarily limit trading in Gamestop, AMC and Blackberry, a decision that angered users, and to raise $3.4 billion in emergency funding to meet clearinghouse capital requirements. As of mid-December 2021, GameStop was trading at about $150 per share, up nearly 700% that year. AMC was up nearly 1,250%, while Blackberry was up just 40%.

7. Coinbase Goes Public and Reveals Huge Profitability

For years, top financial services executives such as Jamie Dimon have doubted whether cryptocurrencies will provide lasting value. Coinbase’s public launch in April was a major milestone in the industry’s path to building mainstream credibility. In regulatory filing For its public listing, Coinbase revealed that it made a net profit of $320 million in 2020 on $1.1 billion in revenue. This kind of profitability is highly unusual for a fast-growing startup that is only 10 years old. The company had a valuation of $86 billion in its first day of trading, but has since fallen to around $70 billion.


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