Fintech initial public offerings have declined in the past year as investors and companies adjust to changing rates and macroeconomic conditions.
The U.S. capital market raises an average of $46 billion each year across all industries and had raised $37 billion through the end of September this year, Lynn Martin, president of the New York Stock Exchange, said at Money20/20 in Las Vegas last month, adding that the market is on track to meet that average number for money raised.
Only six fintech companies around the world had IPOs in the third quarter — namely Currency C valued at $400 million, OneStream valued at $4.6 billion and TWFG Insurance valued at $224 million, for example — compared with 10 during the same period last year, according to the Q3 State of Fintech report by think tank CBInsights, published Oct. 15.
According to Martin, while the IPO market has been down for fintechs this year, the following conditions point toward a spring of fintech IPOs in the coming year:
- Federal interest rates dropping, which will give markets a liquidity boost;
- Continued strength in the economy with low unemployment and inflation;
- Post-election stability, giving businesses a better grasp of the regulatory path forward; and
- High cash surplus in private markets.
Innovation with new technologies like AI also provides companies with ways to boost revenue, helping them make a strong case to raise funds in public markets, Martin said.
Despite fewer fintech IPOs this year, the Bank Automation News’ Stock Index is up by 45% year to date while the S&P 500 is up 26% YTD. The index is the weighted average of 20 fintechs’ stock prices, measured daily.
BAN’s Stock Index comprises of 20 publicly traded companies of various market capitalizations, including Alkami, nCino, Jack Henry, PayPal and Fiserv. The index is baselined to 2014.
Register here for early-bird pricing for Bank Automation Summit U.S. 2025, taking place March 3-4 in Nashville, Tenn. View the full event agenda here.
