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Billion-dollar valuations are broadly considered to be an important marker of a young company’s viability, and a key indicator of potential future returns for investors. However, in many geographies, VC investment in fintech has been slowing recently, and such valuations have correspondingly stagnated.
That said, some segments of the industry still boast relatively healthy numbers of “unicorns,” companies valued at $1 billion or more, a new report by GP Bullhound found.
Here are the report’s key findings:
Alternative finance leads in number of unicorns. Globally, the alternative finance space boasts 16 companies valued at or over $1 billion. This lead is probably down to the fact that many fintechs in the space — like Zopa and Funding Circle — have been around for a while, affording investors time to develop an understanding of their business models. In addition, these companies have had more time to conduct investment rounds, raising their valuations. Also, nine of the 16 alt finance unicorns hail from China — a market conspicuous for its enormous valuations.
Digital payments and data/software companies follow close behind. There are 10 and eight unicorns in these segments, respectively. Payments fintechs have also been around for some time, likely contributing to the higher number of unicorns in this segment. However, the successful innovation efforts of incumbents like Visa and MasterCard seem to have kept the sector from reaching the same heights as alt finance. In the case of data and software, these firms’ solutions are based on elements that are integral and invaluable across multiple industries, increasing their value.
Neobanks, insurtechs, and asset management fintechs boast the fewest unicorns. Globally, the neobank and insurtech segments have just two …read more
Source:: Business Insider