Friday , July 30, 2021

Unicorn Momentum—Like Much Else—Slows in 2020 for Payments Firms And Other Fintechs

Most Americans will be glad to see the last of 2020 as they ring in 2021 in a few weeks, and that group will include private investors. In a year in which the coronavirus ran rampant, damaging many businesses and shuttering others, tech investors pegged significantly fewer privately held payments firms and related companies with the coveted $1-billion-plus valuation.

Some 15 fintechs have joined this club so far in 2020, according to the latest statistics from CBInsights, a New York City-based research firm. With only about four weeks remaining, it’s unlikely this year’s roster of newly minted fintech unicorns—startups that have vaulted that $1-billion valuation—will come anywhere close to the record 25 that joined the list last year.

Among the 2020 arrivals on the list is Tipalti Inc., a 10-year-old payments company whose $150-million Series E round in October valued the company at $2 billion. Other payments firms joining the list this year include Flywire Payments Corp. (founded in 2011) and HighRadius Corp. (2006), valued early this year at $1 billion each.

The slowing momentum this year means the count of newly arrived fintech unicorns barely exceeds the roster of 13 that joined the club in 2018. After a mere five in 2015 and none in 2016, the pace began to pick up significantly in 2017, which saw some 10 fintechs join the list.

A catalyst for valuations last year was a string of megamergers in transaction processing. Global Payments Inc. swallowed the big processor Total System Services Inc. at a $21.5-billion price tag. Earlier, Fiserv Inc. acquired First Data Corp. for $22 billion, and Fidelity National Information Services Inc. shelled out $43 billion to buy Worldpay Inc. Apart from Worldline’s $8.6-billion bid for Ingenico, this caliber of action has been missing this year.

All told, there are now 70 fintech unicorns, according to CBInsights, which has tracked the billion-dollar club since 2011, with some 37 of these based in the United States. The biggest of these by far is Stripe Inc., a payments giant whose $36-billion valuation triggers off-and-on speculation about the possibilities for a public offering. 

The total list of unicorns, embracing all categories, now numbers some 500 firms globally.

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