We have been bullish on fintech after we launched the Matrix Fintech Index in 2017, however even we underestimated the magnitude of the progress to come. Fintech tailwinds, strengthened by the COVID-19 pandemic in 2020, solely accelerated in 2021. And regardless of public markets’ rocky begin in early January, we’re assured that 2022 can be one other banner yr for the sector.
In this yr’s version of the Matrix Fintech Index, we’ll take a look at the efficiency of public fintech versus the broader market in 2021 and mirror on the non-public fintech market’s red-hot yr. Then, we’ll flip our consideration to the yr forward and supply some predictions for fintech in 2022.
Fintech continued to outperform the market by 3x
The Matrix Fintech Index has considerably outperformed main public inventory indexes in addition to a basket of legacy monetary service suppliers for the fifth yr in a row. As a reminder, the Matrix Fintech Index is a market-cap weighted index that tracks a portfolio of 25 main public fintech firms.
Despite a roughly 30% draw-down in the final months of 2021, the Matrix Fintech Index continued to beat the broader market in addition to incumbent monetary service firms. Fintech’s constant outperformance alerts that the adjustments caused by COVID-19 – together with shifts towards e-commerce, on-line funds and digital interactions over bodily ones – are right here to keep.
January 2022 opened with shaky markets and indicators of a number of compression, however we imagine this yr will set one other report with not less than $300 billion in fintech liquidity.
An important yr of public debuts
Last yr was excellent for fintech IPOs, with notable debuts occurring throughout a number of classes. Consumer firms reminiscent of Coinbase ($86 billion) and Robinhood ($32 billion), infrastructure gamers reminiscent of dLocal ($6 billion) and Marqeta ($15 billion), and insurtech suppliers reminiscent of Lemonade ($1.6 billion) all entered the public market.
There was additionally elevated range in the manner these firms went public, with some fintechs skipping the conventional IPO course of altogether. More firms, reminiscent of Coinbase in the U.S. or Wise in the U.Okay., selected direct listings, whereas Robinhood earmarked $700 million in shares for its present prospects.
Others, together with Hippo, Metromile and SoFi, selected to go public by way of SPAC. While SPACs’ observe information have been combined, even accounting for latest market volatility, the rise of IPO alternate options is a welcome change for the rising ranks of late-stage fintech unicorns.
A report yr with 151 new unicorns
Private markets adopted public markets in making 2021 a record-setting yr. VC funding into non-public fintech firms crossed $134 billion in 2021, rising by 177% from a yr earlier, in accordance to Crunchbase.