In response to rapid revenue growth and improving economics, the company saw its value drop 9% in regular trading today after falling sharply in recent sessions. Nu is now worth just $8 per share, down from its all-time highs.
It is hardly alone in its struggles. In the last few months, the valuations of Fintechs have taken a whacking, even more so than the larger software market itself, but the decline in stock prices may be the reason for the negative returns of late.
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Why do we care? The best-funded startup sector may be fintech. According to a report earlier this year, fintech startups collected around a fifth of venture capital dollars last year. A full one in five bucks from an all-time record venture capital year.
The profile for venture capital returns is related to the profile for the startup market.
So how are we to balance falling public-market valuations for fintech companies and simply bonkers-level private-market investment? That’s our question for today. To get our heads around the issue, if not the solution, let’s start with a refresh of fintech venture capital results, the fintech liquidity crunch and what has happened to fintech stocks.
Unless you own a lot of financial technology startup shares, this will be fun.
It's hard to comprehend the amount of capital given to financial technology startups. The total amount of private-market capital invested under the venture auspices was $621 billion in 2021, of which $131 billion went to fintech startups. Dollar volume for the sector was rising more quickly than deal volume, according to data from CB Insights. If you run the numbers, it will allow for a bigger deal over time.
This is from a sector that raised $48 billion in 2020. That is a 168% gain in a single year.
Brex and Ramp and Airbase were raised in the year 2021. FTX and OpenSea are also included. The companies on the list help consumers and companies alike.
The berserk pace of fintech investing outshines the global VC boom
Chime raised $750 million in a Series G in August of last year, pushing its valuation to around $25 billion. Which makes the company an IPO candidate in 2022, right? Maybe, it turns out. According to Forbes, the company's IPO has been pushed back to late 2022. Nu reported lots of growth and its first full-year adjusted profitability and got a tenth of its value decapitated after suffering declines in prior trading sessions.
Does Chime want to go public? Probably not, with investors casting aspersions on one of its best-known global competencies.
From the start of the year to the end of the year, $400 billion has been spent on fintech startups. That amount of money is hard to handle, but we can better understand it as a rising pressure. The more money that goes into any particular sector, and the longer that money sits, the more that investors have anticipations for exits.
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