Could 2024 be the year for fintech IPOs? Quite possibly, according to F-Prime Capital’s State of Fintech 2024 report.
F-Prime — a VC firm with over $4.5 billion in assets under management that tracks the performance of emerging, publicly traded and privately held financial technology companies — naturally remains bullish on the fintech space, noting that: “In aggregate, fintech companies have captured <10% of financial services revenue, yet many scaled private fintech companies are generating $1B+ revenue, still growing rapidly, and expected to list in public markets.”
“Many sizable companies are now filing or considering going public,” says F-Prime.
To be clear, when F-Prime refers to fintech, it lumps together financial technology and crypto/blockchain startups. Here at TC, we have tended to separate our coverage of the two, although arguably, crypto undoubtedly falls under the fintech umbrella. For the purposes of this article, though, we are going to focus on just some of the the non-crypto focused companies that have the potential to go public this year.
Whether any of these companies actually take the plunge remains to be seen; we have to say we’d be excited for even just one to file that S-1 to give us greater insight as to just how much money these companies are (or are not) really making.
As reported by Dallas Innovates last December, “two years after attempting to go public via a SPAC merger that valued it at $4.7 billion post-money, Apex is looking to do it the old-fashioned way with a direct SEC filing…The stock trade clearance firm filed confidentially with the SEC, saying that “the total number of shares to be offered and the price range for the proposed offering have not yet been determined.”
In January of 2023, it was reported that Stripe had set a 12-month deadline for itself to go public, either through a direct listing, or to pursue a transaction on the private market, such as a fundraising event and a tender offer.
Well, it’s been 12 months and we haven’t heard anything about an IPO. But the payments giant did raise more capital last year. Last March, Stripe announced that it had raised over $6.5 billion in Series I funding at a $50 billion valuation. It had been previously valued at $95 billion, giving it the status as one of the highest valued privately held fintech companies in the world. In November of 2022, Stripe laid off 14% of its staff, or around 1,120 people. But the fintech continues to branch out. Last June, TechCrunch reported that Stripe had acquired a (non-fintech!) startup and announced an expansion of its issuing product into credit.
Swedish fintech Klarna confirmed to TechCrunch last November that it was taking steps “toward an eventual IPO.” The company said it had initiated a process for a legal entity restructuring to set up a holding company in the United Kingdom “as an important early step” in its plans for an initial public offering, according to a Klarna spokesperson. The move came on the heels of a positive third quarter in which Klarna swung to a profit and reported 30% higher revenue of around $550 million. Creating a new legal entity at the top of the company’s corporate structure would enable it to list on a stock exchange more easily, the spokesperson added. Its most recent valuation was $6.7 billion, which was down 85% from a $45.6 billion valuation it had boasted a year prior.
Lendbuzz, a fintech company applying artificial intelligence to provide auto loans to people who lack a credit history, in December “hired investment banks for an IPO that could value it at more than $2 billion,” as reported by Reuters. In June of 2021, TechCrunch had reported that the auto finance platform had raised $300 million in debt financing and $60 million in funding.
Rumors have swirled for some time that Chime is eyeing the public markets. Once valued at $25 billion, the neobank was initially, as TickerNerd reports, “all set for a March 2022 debut with a valuation between a whopping $35 and $45 billion,” but then the markets turned. By November 2022, the company had announced it was laying off 12% of its workforce, or about 160 people. Recent reports peg the company’s valuation at closer to $6.7 billion, and it’s possible that Chime could decide to take the plunge this year, considering it was slated for a market entry in late 2023, according to Investing.com.
Last October, TechCrunch reported that Plaid had hired former Expedia CFO Eric Hart to serve as its first chief financial officer — usually a crucial step in a private company moving toward the public markets. Then today, the company announced it had snagged Cloudflare’s chief product officer, Jen Taylor, to serve as its first president. When asked if the move meant that the company was planning to go public, a spokesperson told TechCrunch: “I can confirm that an eventual IPO is a milestone we’re tracking towards, but we don’t have any details or a timeline to share beyond that.” Plaid got its start as a company that connects consumer bank accounts to financial applications, but has since been gradually expanding its offerings to offer more of a full-stack onboarding experience. It was almost bought by Visa for $5.3 billion before regulators put the brakes on that deal — which some call a blessing in disguise.
The HR tech space got really hot, really fast and these three companies are among the hottest in the space. Rippling last March was able to secure $500 million in fresh funding as SVB was melting down. Last June, we found out that Gusto in its most recent fiscal year (the 12 months ended April 30, 2023) had generated revenue of more than $500 million. In January 2023, Deel revealed it had reached $295 million in annual recurring revenue (ARR) by the end of 2022. By November, that number had reportedly reached $400 million. Interestingly, Rippling has been vocal about its rivalry with the other two companies. At TechCrunch Disrupt in 2022, CEO Parker Conrad talked about the fact that Rippling was entering into Deel’s territory. Even as far back as 2020, Rippling went after Gusto with a billboard stating: “Outgrowing Gusto? Presto change-o.”
The spend management space is another crowded one with multiple players clamoring for market share, including Brex, Ramp, Airbase, Navan (formerly TripActions) and Mesh Payments, among others. So far, Navan is the only one to go as far as filing confidentially for an IPO — at a $12 billion valuation. But, that was in September of 2022 and we haven’t really heard anything on that front since. Last December, the company laid off 5% of its staff, or 145 people. Brex, which was valued at $12.3 billion two years ago, has had two rounds of layoffs in the past 18 months, and is reportedly working to reduce its cash burn. Ramp raised $300 million at a 28% lower valuation of $5.8 billion last August. So far, it has not laid off staff. When asked about IPO plans, CEO and co-founder Eric Glyman recently told TC that the company was “excited to explore the IPO process eventually, but have no active timeline around that.”
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