John and Patrick Collison
ETHAN PINES FOR FORBESFintech’s mightiest privately owned companies continued to grow over the past year, but declining investment in the industry signals stormy waters ahead.
It’s turning into a sobering year for fintech. After a carnival of new unicorns and mega-funding rounds in 2021, private fintech companies are now scrambling to cut costs and stretch out the funds they have to avoid needing to raise additional money at a lower valuation (known as a “down round”). Their fear is well grounded.
With publicly traded fintech companies down 50% since November, venture capitalists are putting the brakes on funding for startups in the sector; U.S. fintechs raised $13.3 billion during the first quarter of 2022, a 27% decline compared with that same period last year, according to a report by data provider CB Insights. Even more dramatic, according to the report: the median valuation of late-stage American fintechs that raised money in the first quarter of 2022 was $1.9 billion, 58% lower than those that raised funding in the last quarter of 2021.
Still, it’s been a heck of a ride, fueled in part by the pandemic-accelerated shift towards so much shopping and banking online. In February 2020, just before Covid-19 hit the U.S, the average valuation of America’s ten biggest private fintech companies was $9 billion, and the cutoff to make the list was $3.7 billion. For our 2022 list, those numbers have more than tripled–to an average value of $27.7 billion and a cutoff of $12 billion. Future funding rounds will show whether these record valuations reflect an about-to-burst bubble or are, perhaps, sustainable after a pause.
Of the 10 fintechs on the 2020 10 most valuable list, half have since gone public, including Robinhood. The free stock trading app went public last July at $35 and hit a high of $55 a share. Now it’s trading at just $9, which gives it an $8 billion market cap, down 30% from its value as a private company in 2021.
The most notable newcomer on the 2022 list, and the third most valuable private fintech doing business in the U.S., is crypto trading exchange FTX, worth $32 billion today, after achieving unicorn status less than a year ago. NFT trading platform OpenSea, valued at $13 billion, is also new to our ranking.
Here are this year’s most valuable American private fintechs.
| 1 |
Stripe: $95 billion
Founded in 2011, Stripe helps businesses big and small process online payments, take out business loans and automatically calculate and collect sales tax. The company remains the most valuable American private fintech with a $95 billion valuation raised in a 2021 Series H round, and is the world’s fourth most valuable private company, following tiktok owner Bytedance, Elon Musk’s SpaceX and Chinese fast fashion seller SHEIN. Stripe processed $640 billion in payments last year, a 60% increase from 2020. (Read more about Stripe here.)
Cofounders: CEO Patrick Collison, 33, and president John Collison, 31. The Irish-born brothers have a combined net worth of $19 billion.
| 2 |
Klarna: $46 billion
The pioneer of the buy-now-pay-later model, Klarna banked on customers moving away from credit cards, but still wanting a way to pay over time. Users can buy anything from Nike sneakers to Sephora lipsticks through the app and choose to schedule interest-free payments or pay at check out. The company makes most of its revenue by charging retail partners for affiliate marketing and payments services. Klarna is reportedly working to raise $1 billion in a down round that could lower the company’s valuation to the $30 billion range.
Cofounder and CEO: Sebastian Siemiatkowski, 40, who worked at an accounting firm before starting Klarna and is now worth an estimated $3.2 billion.
| 3 |
FTX: $32 billion
One of the largest crypto exchanges in the world, FTX’s valuation catapulted from $1.2 billion to $25 billion after it raised $1.5 billion in private funding last year. Its valuation shot up to $32 billion after a $500 million raise in January. The Bahamas-based company handles around 11% of the $2.4 trillion in derivatives traded worldwide each month. Eager to become a household name, FTX is spending hundreds of millions of dollars on marketing, signing up celebrity brand ambassadors including Tom Brady, David Ortiz and Kevin O’Leary, as it goes after U.S. customers with a separate entity, FTX US, valued at $8 billion.
Cofounder: CEO Sam Bankman-Fried, 30, the world’s second-richest crypto billionaire with $24 billion, and CTO Gary Wang, 28, worth $5.9 billion.
| 4 |
Chime: $25 billion
The largest digital bank in the United States, Chime rose in popularity by providing free checking accounts with no overdraft fees and offering cash advances to its customers. According to a source familiar with the matter, Chime was preparing to go public early this year but delayed the IPO amid a rocky stock market. CEO Chris Britt says Chime acquired more new customers in the first quarter of 2022 than in any other quarter in the bank’s ten-year history.
Cofounders: CEO Chris Britt, 49, who did previous stints at Green Dot and Visa; CTO Ryan King, 45.
| 5 |
Ripple $15 billion
Ripple facilitates international payments and remittances through blockchain technology and through its dedicated cryptocurrency, XRP. The company has more than 300 institutional clients, including Standard Chartered, Santander and MoneyGram, which uses Ripple for 10% of its cross-border transactions to Mexico. The SEC is suing Ripple for alleged illegal securities offerings through the sale of XRP. CEO Brad Garlinghouse says he might consider taking the company public once the lawsuit is settled.
Cofounders: Executive chairman Chris Larsen, 59; Jed McCaleb, 49; Arthur Britto, CEO: Brad Garlinghouse, 49, a former AOL president.
| 6 |
Blockchain.com: $14 billion
The British crypto exchange is the world’s most popular cryptocurrency wallet allowing users to manage their private keys for several currencies. It has expanded to the U.S. and now can serve customers in 35 states, including California. Founded in 2011, the company claims one-third of the world’s bitcoin transactions are conducted on Blockchain.com, with 83 million wallets and over $1 trillion transacted since its launch.
Cofounders: CEO Peter Smith, 32, an early bitcoin enthusiast; and Vice-Chairman Nicolas Cary.
| 7 |
Plaid: $13.4 billion
Founded in 2012, Plaid helps fintech apps like Venmo and Coinbase connect to customers’ bank accounts, facilitating smooth payments and deposits. Earlier this year, Plaid acquired identity verification and KYC (know your customer) compliance provider Cognito for $250 million. Plaid grew its customer base from about 4,500 in late 2020 to 6,300 by the end of 2021.
Cofounders: CEO Zach Perret, 34, and former CTO William Hockey, 32, the cofounder of new Fintech 50 member Column. The pair met as junior Bain consultants before founding Plaid in 2012.
| 8 |
OpenSea: $13.3 billion
A big winner in 2021’s NFT craze, OpenSea is a peer-to-peer platform where users can create, trade, buy and sell NFTs. The company, founded almost five years ago, keeps a 2.5% cut of each sale and has been processing about $3 billion in NFT transactions monthly, earning roughly $75 million in monthly revenue. With over 1.5 million accounts having transacted on the platform, OpenSea maintains dominance in the NFT market, but key competitors like Coinbase, which launched its NFT exchange in May, are trying to close the gap.
Cofounders: CEO Devin Finzer, 31, and CTO Alex Atallah, 30. They became the first NFT billionaires in January 2021.
| 9 |
Brex: $12 billion
Corporate banking products suite Brex provides FDIC-insured corporate cash management accounts and corporate credit cards with no account fees, travel rewards and built-in expense tracking. Its online dashboard offers expense-management software and facilitates businesses’ bill-paying process. In August, the San Francisco-based company launched a lending service geared towards venture-backed tech companies and made its biggest acquisition yet in April—spending $90 million on a software startup to help users with budgeting and financial projections. Its tens of thousands of customers include ClassPass, Airbnb and Carta.
Cofounders: Co-CEOs Henrique Dubugras, 26, and Pedro Franceschi, 25, launched Brex after dropping out of Stanford.
| 10 |
GoodLeap: $12 billion
California-based GoodLeap makes it easier for users to make green home upgrades. It has funneled $13 billion in financing to about 380,000 homeowners—half of that just within the past year—through partner banks, including Goldman Sachs, which make the loans and then securitize the debt to sell to investors, using its software to track loan performance. Contractors and vendors use GoodLeap’s point-of-sale app to get customers’ project loans instantly approved for solar panel installation, and as of last year, more than 20 other categories of sustainable improvements, including battery storage, energy-efficient windows and water-saving turf.
Cofounders: Chair and CEO Hayes Barnard, 50, and Chief Revenue Officer Matt Dawson, 48, two longtime executives at SolarCity (now Tesla Energy); and Chief Risk Officer Jason Walker, 48, a veteran mortgage broker.
MORE FROM FORBES
