Is the Population of Fintech Unicorns Going Out of Control?

Venture capital investment is the lifeblood of the fintech boom. The only reason the field hasn’t gone bust is that investors still have a ton of faith in tech startups. How much faith do venture capitalists have in fintechs? Billions of dollars.

Fintech mania unofficially started in 2012. According to the industry historians at Fortunately, this was the year the floodgates for massive venture capital investment opened.

Since then, upstart companies in this tech space successfully raised eye-popping funds on a yearly basis to give traditional financial institutions something to lose sleep over and sustain their operations with little pressure to (at least) break even.

Although most of the capital has always gone to U.S.-based startups, fintechs in the Asia-Pacific and Europe have managed to rise in their region and earn global recognition.

After years of raking in boatloads of VC money, 39 tech firms in the financial services industry have evolved into unicorns — startups that are worth a minimum of $1 billion. Most consider China and the United States their home, and six are based in Europe.

Collectively, the valuation of these 39 fintech unicorns is a staggering $147.37 billion. Considering that many of them are not yet profitable, it is impressive how much investor confidence they consistently inspire.

The unicorn population is bound to keep growing. Thus far, 2018 was the best year for fintechs in terms of investment, and momentum remains on their side. The increasing number of “overvalued” tech startups may be causing concern among some circles in the industry, however, sparking fears that a financial bubble may have already formed.

Are investors starry-eyed to carelessly gamble so much on highly promising but dangerously unproven companies? Not exactly.

British bankers themselves are convinced that they may lose up to 40% of retail revenue to fintechs next year. By 2025, tech companies could take over all the major sectors of retail banking: consumer finance, mortgage lending, small business lending, payment processing, and wealth management. If this prediction comes true, a new breed of unicorns will likely be born.

Check out the following infographic to learn more about the prosperous years fintech startups have had.


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