The year in fintech exits
Whenever an incipient industry emerges, the first phase is marked by the arrival of new entrants, which is followed by a period of consolidation.
Companies in the first phase focus more on revenue than on profit, as they race to build market share, and to position themselves to become one of a select few consolidators.
While the ebullient digital currency business is still in the first stage, other parts of the U.S. financial technology sector, including the online lending industry, have moved on to the second.
The industry’s maturation is illustrated in data from KPMG, which publishes a quarterly report on fintech investment.
KPMG found that 2015 was the peak year for venture capital investment in U.S. fintech firms, with roughly $7.5 billion having been invested that year. More recently, many early-stage investors have been looking to cash out.
Ideally that happens via an initial public offering or in a splashy acquisition by a bigger firm. In other cases, the rush to the exit is less graceful, as startups close up shop or sell themselves at sharply discounted prices.
Exit activity in the U.S. fintech sector will keep rising, KPMG predicts.
“Fintech M&A is set to continue as startups realize that in order to manage complex regulatory requirements and achieve scale, they need to partner with or be acquired by incumbents,” Anthony Rjeily, fintech practice lead for KPMG in the U.S., said in the firm’s most recent report.
What follows is a look at some of 2017’s more prominent fintech exits. The list includes both online lenders and mobile banking apps.