The U.S. IPO market sizzled in 2020, with 407 companies hauling in $145.3 billion. Among them were 15 fintechs, including Lemonade, Rocket Companies, Root, SelectQuote, Shift4 Payments and Upstart.
Conor Witt, a fintech research analyst at data and analytics provider CB Insights, believes 2021 could see more activity on the fintech IPO front, surpassing last year’s 15 fintech IPOs. To kick off the year, alternative lender Affirm started trading on January 13 and SoFi revealed that it’s going public via a SPAC on January 7. Other fintechs that may go public this year include AvidXchange, Better.com, Chime, Coinbase, Flywire, Hippo, Marqeta, Robinhood and Stripe.
At least four of those high-flying fintechs — Affirm, Better.com, Coinbase and Robinhood — are among the most hotly anticipated in 2021, according to several market observers. In a Jan. 5 S-1 filing, Affirm, a San Francisco-based lending platform, indicated it hopes to raise nearly $935 billion through its IPO. It originally filed an S-1 in November 2020. And with the dissolution of its merger agreement with Visa, Plaid is also now an IPO contender.
This year’s potential surge in fintech IPOs comes on the heels of a record-setting 97 fintech mega-rounds of at least $100 million in 2020, according to CB Insights. Three of the 2021 candidates for fintech IPOs collected three of the biggest mega-rounds last year: wealthtech platform Robinhood ($660 million), digital bank Chime ($485 million) and B2B paytech company AvidXchange ($388 million).
“Mega-rounds have become more common as successful startups are generally staying private longer. However, the recent spate of IPOs and IPO filings may indicate the start of a shift in this trend,” CB Insights noted in its second-quarter fintech report.
Given how receptive the markets were last year to fintech IPOs, Witt thinks some fintechs that have shied away from public offerings will re-evaluate that stance. In part, that’s because the generally strong performance of fintech IPOs in 2020 has comforted institutional investors that back fintechs, he said.
The Crowdfund Insider website believes 2021 may be the year that fintechs “really blow the doors [off the] public markets.”