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Who wants to be a (Fintech) Unicorn?

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For the past year, there’s been lots of talk about Fintech Unicorns – start-up companies with over a billion dollar valuation launched since 2000.  Jim Bruene at Finovate – register for Finovate Europe with 20% discount using FSClub20 – wrote about so many Fintech unicorns in July 2015, showing the list increasing four-fold in just a year to 46 companies.  This year, is it going to be less?  I wonder this question mainly because I think the whole idea of the Fintech unicorns has been over-stated.

Take TransferWise.  A company that has a unicorn valuation and yet whose revenue model is just under $10 million.  $1 billion valuation for a $10 million company?

Or take SoFi.  SoFi specialise in the market of HENRYs – High Earners Not Rich Yet – and are expanding their portfolio by landing HENRYs with huge debt burdens such that when and if they ever get rich, they’ll owe it all to SoFi. Does this model make sense?  Obviously it does to some as, in their last funding round, they received over $1 billion investment … and they only wanted $200 million.

Meanwhile, other firms like Funding Circle are being given honours from the Queen, whilst the world’s biggest Fintech unicorn, Lufax, is using its latest $1 billion+ funding to build a bank.


Or is it?

Some are already predicting a landscape full of dead unicorns.  I’m not one of them, but it’s quite clear that so many will not survive.  How many start-ups can succeed after all?  Not all.

A good example is the latest round of blockchain hyped firms.  There are hundreds vying for attention, and my eye recently caught the fact that there are large numbers of firms now growing in digital identification, digital assets and digital clearing.  Just take the clearing and settlement space and you have Colu, Epiphyte, Clearmatics, Setl and more.  And then, just as I mention them, you have news reports of the blockchain start-ups running out of steam.

It’s interesting as a lot of this is just rumours, smoke and mirrors.  For example, let’s take Blythe Masters’ hot start-up Digital Asset Holdings as a case in point.  I met Blythe in December and embarrassed myself by asking if she was off to Barclays.  Just rumours, she replied and no she isn’t.  It doesn’t mean she wasn’t asked, just that she turned it down. The next rumour fires up that her company, Digital Asset Holdings, will fail as it can’t find funding (December 30 2015) only to announce $50 million in funding three weeks later.

So what is clear to me is that you cannot trust anything you see written about anything today, including this blog.  And if you think you saw a Unicorn, don’t be too sure it’s the one you want to invest in.


Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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