It has been among the most talked about firms on Wall Street as retail investing has grown in popularity amid the pandemic, and more recently, as Reddit-fueled investors used the platform to buy up heavily shorted stocks like GameStop (GME).
But Robinhood is far from the only financial technology, or fintech, startup expected to make its public debut this year. From Betterment and Chime to Coinbase and BlockFi, the IPO market for fintech companies still has plenty to offer in 2021, though their valuations may be slashed, according to Kathleen Smith, IPO ETF manager at Renaissance Capital (IPO). Shares of the Renaissance IPO Index are negative so far in 2021, though handily outperformed all major indices over the last 12 months.
"The IPO market is starting to get weighed under by the amount of issuance that we've seen, and the multiples so there's like a valuation reset happening in the IPO market," she told Yahoo Finance.
Coinbase is the largest cryptocurrency exchange in the U.S., with a valuation of $68 billion. The company filed an S-1 with the SEC last month ahead of its expected direct listing. The timing couldn’t be better for Coinbase, as it reported total 2020 revenue of $1.3 billion with net income of $322.3 million.
"All these [cryptocurrency] exchanges and brokers have traded really well,” Smith told Yahoo Finance. “And I think that with Coinbase, it's one of the few plays on...the growth of crypto, because you can't really buy right now a bitcoin ETF or anything else like that.”
Getting access to a cryptocurrency exchange also gives investors the ability to play in the crypto space without having to be completely exposed to the frequent swings in cryptocurrency values.
Better.com, which has a valuation of $4 billion, is an online mortgage lender that eschews the brick-and-mortar setups of traditional lenders. It’s more akin to something like Rocket Mortgage, whose parent company Rocket Companies (RKT) went public in August 2020, raising $1.8 billion at a valuation of $36 billion.
Better.com’s selling point is that it doesn’t hit users over the head with fees, charging nothing for your application, underwriting your loan, and loan origination. The firm also promises 24/7 support including on weekends, doesn’t charge commission on loans, and provides loan estimates right away, with users able to get pre-approved in three minutes.
Betterment is perhaps the best established and well known tech-driven automated investing platform. Alongside Wealthfront, the firm popularized the idea of a robo-adviser, which major banks then replicated. Betterment has since combined traditional human wealth management into its product, offering a hybrid model to customers.
The company, launched in 2010, has a valuation of $800 million. Over the last several months, the company has made some big moves as it prepares to go public. In December 2020, co-founder Jon Stein stepped down as CEO, bringing in veteran female TV executive Sarah Kirshbaum Levy as his successor. Earlier this month, Betterment acquired the U.S business of Toronto-based Wealthsimple, gaining market share.
Another cryptocurrency-based offering, BlockFi is a financial services lender that allows users to put up their bitcoin, ether, litecoin, or pax gold as collateral for loans offered in U.S. dollars. Interest rates for loans go as low as 4.5%, the company says. BlockFi also provides a crypto-based interest account where customers deposit their cryptocurrency and can earn up to 8.6% interest, far more than a standard bank savings account.
The company raised $350 million in additional funding in March, putting its valuation at a whopping $3 billion. Just like with Coinbase, BlockFi allows consumers to invest in cryptocurrency without having to worry about cryptocurrency price fluctuations.
The concept of a “branchless bank” was already ubiquitous among young consumers before March 2020, but the coronavirus pandemic has turbocharged the popularity of online banking. Chime has been one of the fastest growing fintech startups since CEO Chris Britt co-founded the firm in 2012. It's now valued at an eye-popping $14.5 billion.
The digital bank has 12 million customers, who turn to Chime for its user-friendly interface and various features that distinguish it from a typical bank. Among other offerings, Chime allows customers to get two-day access to direct-deposited paychecks, and has offered early access to stimulus and tax checks, as well.
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