Methodology

Highlighting the names that people don’t know…yet

Defining the universe

Fintech is - obviously - a portmanteau of Finance and Technology. It is frequently used to refer to new(ish) companies that use technology to perform the functions that would previously have been undertaken by an established bank, insurance company or other financial institution. Typically, the idea is that the technology provides the new company with a competitive edge in terms of lower cost, greater flexibility, innovative distribution, attractive product or whatever. The new companies, usually with some reason, are often described as being ‘challengers’ or ‘disruptors’.

However, it is wrong to think of fintech companies as being naturally and automatically in competition with incumbent players. Frequently, the fintechs are developing or providing technology that can be used by the established companies.

Major consulting firms - and others - have done a good job of defining the size of the universe of fintech and identifying transactions that have taken place. For instance, KPMG’s latest Pulse of Fintech report, which was published in February 2023, suggests that total investment in fintech (including situations where companies are listed) over the course of last year amounted to $164.1bn. There were 6,006 deals, of which 5,136 involved investment by VC funds. VC investment in fintech in 2022 amounted to $80.5bn, or almost half of the total: much of the remainder was accounted for by merger and acquisition (M&A) activity.

Following the money

Th basic assumption that is mad in th compilation of th databas is that th manag rs of and th inv stors in th fint ch compani s hav th b st und rstanding of th compani s prosp cts

If a funding round has b n compl t d in th last two y ars, that is a good sign

If a funding round in th last two y ars has b n follow d rapidly by anoth r funding round, that is an additional good sign

If th amounts rais d in th funding round(s) ar substantial r lativ to th ass ss d valu of th fint ch company, that is a particularly good sign. [NB th ov rall valuations of th fint ch compani s in th Fint ch Pathfind r sampl can g n rally b inf rr d from public comm nts mad at th tim of th funding round(s). In som instanc s, it has b n n c ssary for our r s arch rs to inf r th valuations using oth r m thods.]

Ev ry ranking that is produc d from th databas will cl arly id ntify what it shows. Most commonly, th rankings will id ntify thos compani s that hav compl t d at l ast on funding round in th last two y ars and wh r th amount(s) rais d ar substantial r lativ to th ass ss d valu of th company.

Th compani s in th Fint ch Pathfind r databas ar div rs in t rms of th ar as in which th y op rat . As of May 2023, th numb rs of compani s in th databas w r as follows: