The Wall Street Journal (WSJ) publishes a Billion Dollar Startup Club list.

It is a simple matter to extract the Fintech ones from that list:

• Square

• Lending Club

• Stripe

• Credit Karma

However this is lazy list journalism based on the headline valuation in private rounds. You would assume that a financially literate news outfit like WSJ would know the difference between Preference and Common shares, but then this article caught my eye, particularly this bit:

“Hortonworks Inc., one of several companies commercializing the big data software Hadoop, appears to have dropped out of The Wall Street Journal’s Billion Dollar Startup Club.

New regulatory paperwork filed in connection with the company’s planned initial public offering shows an implied valuation of less than $600 million, significantly lower than what the company reported in March, when Chief Executive Rob Bearden told Venture Capital Dispatch that Hortonworks had raised a $150 million Series D round at a valuation of more than $1 billion.”

It is hard to parse common share valuation from public numbers. However any financially literate journalist should know that the headline number is not enough to state what a company is worth. This is probably related to that other digital currency – the currency of page views that rewards lazy journalism; but that, as they say, is another story.

As the old saying goes:

“Only when the tide goes out can we see who has been swimming naked”

Or to put it in venture terms:

“Only when a company does an IPO or Trade Sale do we know what the valuation really is”

That Billion Dollar StartUp Club looks long, until you see that over 25 have almost exactly $1 billion headline valuation. Is there some branding value here? Or is this just making founders and early investors feel good?

Lending Club is clearly a Unicorn. We will soon have Mr. Market make his judgment post IPO, but it looks like the company will be valued around $4 billion.

The biggest story out there is Square. With nearly $500m invested and a headline valuation of $6bn, surely Square is one of the big winners? Well, the tide has not yet gone out, so we don’t know. Stripe is a smaller shooting star with “only” $1.8bn headline valuation. I wonder if both Square and Stripe are as vulnerable to the Bitcoin payment disruption as the banks.