Whenever we speak of fintech development, the USA must be mentioned
Whenever we speak of fintech development, the USA must be mentioned. This land of opportunities harbored 57% of fintech companies existing in the world back in 2018. Today, USA-based fintech investments account for 61% of total funding across the globe, more than in any other country. Total fintech investment across M&A, VC, and PE in the US in 2019 set a new annual record of $59.8 billion. Moreover, 2019 brought us 12 new fintech unicorns born in the US. The market’s largest segment is projected to be Digital Payments with a total transaction value of $895,790m in 2020. Meanwhile, the valuations of the existing major players grew enormously over the last year. Here is the list of the best-performing fintech players in the USA ranked according to their current market cap figures.
Top 10 US fintech startups
- Stripe ($36B)
- Ripple ($10B)
- Robinhood ($8,6B)
- Coinbase ($8B)
- Chime ($5.8B)
- Toast ($4,9B)
- SoFi ($4.8B)
- Marqeta ($4.3B)
- Gusto ($3.8B)
- Root Insurance ($3.36B)
Built for developers, Stripe offers a set of unified APIs and tools that instantly enable e-commerce businesses to accept and manage online payments. Stripe’s latest funding round was a Series G for over $600M in March 2020. Among Stripe’s star-studded list of investors are Peter Thiel and Elon Musk. Its revenues this year were pushed by growth in online shopping caused by the national lockdown. Although the exact number is unknown, Stripe’s annual revenues were estimated to reach $3.4 billion in 2019. Major updates to the Stripe payment platform include worldwide direct connectivity to six major card networks; a revenue optimization engine; and Stripe Issuing – the first self-serve card issuing API. The company has also announced the launch of a lending arm called Stripe Capital.
Ripple is an all-in-one digital payment network for transfers using its proprietary cryptocurrency (XRP). This digital payment asset was created for enterprises but, as a result, XRP became the favorite crypto of many banks. Being one of the top 3 digital currencies by its market cap, Ripple (XRP) has a huge potential today. According to NASDAQ, “A leading altcoin positioned for potentially big gains in 2020 is Ripple.” Some experts also suggest that XRP can become a great financial solution to connect the entire world economy during the coronavirus crisis. At the same time, the company’s blockchain system, RippleNet, provides large banks, businesses, and sovereign funds the ability to send and receive payments through multiple programs.
In 2019, Ripple raised a $200 million Series C funding round. In Q2 2020, total XRP sales were $32.55 million vs. $1.75 million in the previous quarter. The company now owns $12 billion worth of XRP tied up in escrow accounts.
Robinhood’s proprietary mobile app allows individuals to invest in public companies and exchange-traded funds listed on the U.S. stock market commission-free. The company has raised a total of $1.5 billion over 10 funding rounds. During the April through June period, Q2 2020, the company’s revenue from payment for order flow significantly increased. By rough estimations, it doubled from $90,9 million in Q1 2020 to $183,3 million, also showing more than a 100% increase year-on-year.
SEE ALSO: Robinhood app guide & ins and outs
Coinbase is a global digital asset exchange company (GDAX), providing a venue to buy and sell digital currencies, as well as send information about those transactions out to the blockchain network to verify those transactions. As Reuters has recently reported, this popular cryptocurrency trading platform could pursue a public debut later this year, or early next year. Chances are, Coinbase may choose a direct listing for its shares, instead of a more traditional initial public offering. Corporate revenue data is quite scarce. After the impressive 5329% growth rate in 2017, mainly explained by the crypto bull market and ICO boom, revenues shrank by about 60% in 2018. By rough estimations, Coinbase made a total turnover of $488m and a profit of $146m in 2019.
SEE ALSO: Top 10 crypto exchanges in the world
Chime has been successfully operating in the US since 2013 as a digital-only bank. Its revenues are expected to have reached nearly $200 million in 2019 despite the zero-fee customer policies. Due to the coronavirus outbreak, this bank’s popularity rose. The user number passed seven million accounts in January 2020 and kept growing enormously ever since. Meanwhile, Chime’s funding increased to $805 million. With the latest valuation of $5.8B according to Forbes, Chime is the most prospective among other US challenger banks.
Toast is an innovative fintech that offers cloud-based POS technology to disrupt the restaurant industry. Contactless services offered by Toast allow diners to make orders and payments directly from their mobile phones by scanning QR-codes. The technology also includes a payroll and team management platform. During 2019, Toast’s revenue increased by 109% as tens of thousands of new restaurants joined the Toast community. In February 2020, the company announced a $400M Series F funding round which brought the startup a $4.9B valuation.
Social Finance, Inc. (commonly known as SoFi) is an online personal finance company that provides student loan refinancing, mortgages, and personal loans at a low cost. It also provides investing opportunities via the proprietary platform. SoFi Invest has seen a strong twofold increase in users this year. SoFi Money, a cash management account, was another service launched in 2019. This April the San Francisco-based startup also acquired Galileo, a payments software company, for $1.2 billion.
Marqeta is a successful cloud-based fintech platform for card issuing, payment processing and settlement, and many more. It works with open APIs and Web-Hooks to allow full customization. Its clients include Square, Uber, Affirm, Instacart, and DoorDash. Marqeta operates in the United States, Canada, Europe, and Australia and is certified to process payments in 10 countries in APAC. Its total funding amount is $528m, with the latest cash inflow of $150m coming this May. In 2019, Marqeta’s revenue exceeded $300 million, which is more than twice its 2018 financial results.
This payroll provider is promoting a flexible payroll system. Gusto has developed a Flexible Pay solution allowing employees to have access to the money they’ve earned when they need it. Its proprietary platform helps businesses to onboard, pay, insure, track working activities, and support their teams with ease. Gusto’s annual revenues are estimated between $100 million and $174 million. The company’s latest $200m financing round occurred in 2019 to expand its healthcare offers, technical talent base, and the scope of research.
Root Insurance ($3.36B)
This InsurTech unicorn deals with auto insurance in a modern and convenient way. Its mobile app tracks the driver’s behavior behind the wheel during the ‘Test Drive’ period. The users’ insurance rates then depend on personal driving skills and experience. The company doesn’t cover drivers it has accessed as “high-risk”. In 2019, the startup raised $350 million in a Series E funding round. The money will be used to scale up and develop new product lines. The portfolio of the insurer is steadily growing – it was three times bigger at the end of 2019 than at the end of 2018. Fourth-quarter 2019 saw a loss ratio at 93 compared to 113 in the prior quarter. Overall, the company ended the year 2019 with a 100 loss ratio. Root’s estimated annual revenue is about $67.5M per year.