“The infrastructure has been taken to a completely different level,” said CJ MacDonald, founder of Step, a debit card provider aimed at teens. Introduced in September, Step quickly reached one million customers, thanks in part to endorsements from social media influencers like Charli D’Amelio.
In December, Step raised $ 50 million in funding. The company is not looking for more money, MacDonald said. But investors started raising funds as soon as the app joined the most downloaded list of financial apps as soon as it was released. This money will come together in a few weeks, he said.
Investors are even rushing to buy the broken deals. Plaid, which agreed to sell itself to Visa for $ 5.6 billion last year, saw the deal clear up in January after facing antitrust scrutiny. The fast-growing company is currently in talks with investors to raise capital at a valuation of nearly $ 15 billion, two knowledgeable people said to have told them they were not identified. because discussions are confidential. Previous information has reported Plaid’s funding negotiations.
Sheel Mohnot, an investor at Better Tomorrow Ventures, said Plaid’s selling price for Visa was considered “too great” at the time. But for now, with many fintech firms hitting a $ 100 billion valuation, this looks low.
Some warn that the excitement is far beyond reality.
Robert Le, an analyst at PitchBook, points out Affirm’s valuation, the company has a market capitalization of $ 20 billion, or about 40 times annual sales. This figure is significantly higher than the value that investors typically attribute to blue-chip financial services firms. For example, American Express deals with three times its annual revenue.
“I think it’s a little illogical,” said Le. “In the long run, some of these companies will have to go down.”
A number of startups have faced growing difficulties. Chime, a banking startup, was massively shut down in 2019, leaving millions of customers without access to their money for hours. Several Coinbase customers reported having had their accounts locked out or had their money stolen. And Robinhood faced nearly 50 lawsuits and regulatory investigations after it halted trading for a number of stocks during the January meme stock frenzy.