The 50 Hottest FinTech Startups That Are Driving The Industry

Forbes

The past year has been painful for the financial technology industry, with publicly traded fintech stocks languishing 50% below their late 2021 peak, even as the S&P 500 has surged to new highs. Venture capital funding for fintech startups is even more depressed–it fell more than 70% from $141 billion worldwide in 2021 to $39 billion in 2023, according to CB Insights. Both layoffs and fire sales have spread.  Yet our new 2024 Fintech 50 list is packed with extraordinary entrepreneurs who have adapted and flourished in this environment. Three categories that primarily serve other businesses—Payments, Wall Street & Enterprise and Business to Business Banking–made the strongest showing, accounting for 27 of our 50 picks and seven of the 13 first-time honorees on this year’s list, our ninth annual honor roll of the most innovative private businesses in fintech.   Forbes Senior Editor, Jeff Kauflin, and reporter Emily Mason sat down in studio to break down this year's list and highlight some of its newcomers and trends.   Read the full story on Forbes: https://www.forbes.com/lists/fintech50/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00 Hi, everyone. My name is Jeff Coughlin. I'm a senior editor at Forbes, and I'm joined

00:07 by my colleague, Emily Mason, who's a reporter at Forbes. We both cover fintech, and we're

00:12 going to be here talking about our 2024 fintech 50 list, which is our ninth annual version

00:18 of our list of the most innovative private fintech companies.

00:23 Thanks for the intro, Jeff. So I guess list overall, like what are some themes that you're

00:27 noticing? Any notable trends pop out? Yeah, a few things. I would say among the companies

00:33 that we're doing better are payments companies, companies providing business banking services,

00:39 and other kind of back-end technology providers. And we see that a lot when, you know, the

00:45 industry isn't doing as well. You can't spend as much money on marketing to attract consumers.

00:50 And so that's what we're seeing is some of these back-end infrastructure companies doing

00:54 better. And among the companies that aren't doing as well and had kind of a lesser showing

01:00 on the list are personal finance companies, cryptocurrency companies, and real estate

01:08 companies. Who are some of the top players on the list this year?

01:12 Yeah, so speaking of payments companies, I think two that really stand out in that category

01:17 are going to be Stripe and Plaid. They might not be on the list for too much longer because

01:21 we only feature private companies and they've kind of been stirring IPO rumors for a couple

01:25 years now. Stripe reportedly at the end of last year told employees that they would make

01:30 a decision about going public in the next year. And Plaid hired its first ever chief

01:34 financial officer in October. So that's usually a sign that it might be on the horizon. So

01:40 that's something we're definitely watching. Another big company to keep an eye on is Mercury.

01:46 They're a digital bank for small businesses and startups and they had $95 billion in transactions

01:52 processed in 2023, which was a 95% jump from the year before. So that's definitely like

01:58 a strong showing from them. I think another one to kind of keep an eye on is probably

02:03 Wealthfront. They've been around since 2008 and they're a robo-advisor and they've really

02:08 kind of stuck it out even as they've had competition from incumbents come. So Vanguard and Schwab

02:13 have both launched their own robo-advisor competitors and they've really stuck it out.

02:18 I think they had, it was $200 million in revenue in 2023 and their assets under management

02:24 kind of continue to grow. So they're another strong player to like keep an eye on.

02:28 Yeah, that was a surprising one, especially with Wealthfront. You know, they've been around

02:31 a while, like you said, and to see them kind of really have such a big year where they

02:36 grew revenue so much was really surprising.

02:38 Yeah, and exciting for us. So that's cool.

02:42 Last year was kind of particularly rough for fintech startups. Like, do you want to talk

02:45 about kind of the market overall and what it's looking like right now?

02:48 Yeah, it was 2022 and 2023 were both really rough for fintech. And so what we saw was,

02:58 you know, still continued layoffs. We saw valuations falling. Venture capital certainly

03:05 is going through a dry spot for sure, continues to. I think venture funding in 2022 was around

03:14 $79 billion, which was already down a lot from 2021. And then it was down again to about

03:20 $38 billion in 2023, according to CB Insights. So tough, definitely another tough year for

03:27 fintech. Companies are really focusing on making their cash last longer, you know, burning

03:32 less money, trying to get closer to profitability. So another tough year. Some valuations that

03:40 fell as well that we saw. Ramp was one example. Another was Next Insurance, which fell from

03:47 about $4 billion in 2021 to $2.5 billion from a November 2023 fundraise. But that's just

03:55 part of the market. Just like the publicly traded fintech stocks, we're seeing the valuations

04:00 fall. We see that in the private market as well. It doesn't mean they're not good companies.

04:05 Both of those, Ramp and Next Insurance, are less. They're growing. Good businesses. And

04:11 so it's interesting to see that dynamic play out, though, with the market values falling.

04:16 But that doesn't mean the companies aren't actually doing well and still growing.

04:20 In talking about the rough year for fintech companies, were some of the fintech companies

04:25 affected by the layoffs that we've seen in the tech industry overall?

04:29 Yeah, I mean, I think fintech has not been kind of exempt from layoffs that have been

04:34 prevalent in the broader tech industry. I think in the public market, SoFi, Block, PayPal,

04:39 they're all big, really strong companies that have had to do layoffs. On our list, Navon

04:45 and Melio are two that have had to do layoffs in sort of recent history. And I think it,

04:49 again, just kind of goes to your point that even the strongest companies aren't really

04:52 exempt from the current environment, and they still are kind of having to take steps to

04:56 reduce their cash burn and sort of focus on shifting to profitability and running a really

05:00 efficient business. So that's been interesting. That's kind of a harsh reality of right now.

05:06 Are there any sort of particular services that have come up as like a new need in fintech

05:10 or like kind of a new green space that you're looking at?

05:13 Yeah, there are a couple that come to mind. So one is cyber insurance. And so cyber insurance,

05:21 it's interesting. It's essentially if you want to get insurance in case you get a ransomware

05:26 attack or in case you have, you know, someone falls for a phishing email, and that has grown,

05:33 continues to grow. And that's because cyber attacks keep growing. And similar to that

05:38 is fraud. Fraud keeps growing as well. And because of that, there's a growing need for

05:45 fraud prevention companies. So those are a couple of areas where we see a new need based

05:51 on market dynamics. A lot of the other fintech companies on our list are, it's kind of a

05:58 longer trend of, you know, how do you use technology to make financial services cheaper

06:04 and faster and more accessible? And so, you know, a lot of these companies that are making,

06:12 whether it's payments or bank accounts, cheaper and more accessible, that's kind of a multi-year

06:18 long trend that really has been around since the beginning of fintech.

06:22 Every year for the fintech 50, it's always interesting to look at who are the newcomers

06:26 to the list, because we have a lot of incumbents who make the list many times over. Or should

06:32 I say startups that are incumbents to the list. Who are some of the interesting newcomers

06:38 for this year on the 2024 fintech 50?

06:42 Yeah, newcomers are really exciting. We had 13 on the list this year. I think one that

06:47 was interesting to look at is Pulley. They're kind of a cap management tool for startups.

06:52 The CEO and founder, Yin Wu, is a serial entrepreneur, so she knows startups really well. And it's

06:58 kind of been interesting to watch some drama with one of their big competitors, Carta.

07:01 They kind of got into some hot water with clients because they were reaching out to

07:07 clients' investors and kind of asking them about the shares that they held and if they

07:10 were willing to sell. And that kind of made some of their clients upset. And she kind

07:14 of took to Twitter to push her own platform and say, "If you switch to us, we'll offer

07:19 you discounts." So that's been an interesting kind of dynamic to watch unfold.

07:25 I think the other one that's kind of been interesting is Data Snipper. They're an AI-powered

07:29 tool that lives in Excel, and it sort of helps audit and finance teams reconcile data from

07:35 a lot of different sources and make sure that expense records are adding up and that it's

07:39 all kind of come together in a more efficient way. So they're another really interesting

07:43 one to keep an eye on.

07:44 Yeah, I found that one interesting too. I think they recently hit a $1 billion valuation,

07:49 if I'm not mistaken, and their CEO is the former CMO of Marquetta.

07:54 Yeah, that's really interesting. There's three founders. They're all around 30 years

07:59 old, early 30s. They bootstrapped the business for the first five years. And then, as you

08:04 said, they've reached a $1 billion valuation. So that's really cool.

08:07 Well, Emily, thank you so much for joining me in this conversation. And I can't wait

08:12 to continue the conversation.

08:13 Thank you.

08:14 Thank you.

08:14 [END]

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