“Infrastructure has gone to a different level,” CJ Macdonald, founder of Step, a debit card provider aimed at teenagers. Introduced in September, Charan quickly reached one million subscribers, partly from support from social media influencers such as Charlie Defio.
Stepp raised $ 50 million in funding in December. The company was not looking for more money, Mr. Macdonald said. But investors started making calls, joining the top-downloaded finance app list as soon as this app was released. He said the money came together in a few weeks.
Investors are also ready to buy into broken deals. Plaid, which agreed to sell itself for Visa for $ 5.6 billion last year, canceled the deal in January after facing Antitrust check. Now the fast growing company is negotiating with investors to raise funding at a valuation close to $ 15 billion. Company officials tell two people that they talk on the condition that they are not identified because the discussions are confidential. information East Plaid’s funding talks reported.
Sheil Mohunt, an investor at Better Tomorrow’s Ventures, said the sale price of Plaid’s visa was seen as “very surprising” at the time. But now, with many fintech companies coming to a valuation of $ 100 billion, it seems low.
Some caution is that enthusiasm has transcended reality.
Robert Lay, an analyst at Pitchbook, pointed to Eferm’s valuation, which has a market capitalization of $ 20 billion, or about 40 times annual revenue. This is much higher than the value that investors typically assign to blue-chip financial services companies. American Express, for example, trades at just three times its annual revenue.
“I think it’s a bit irrational,” Mr. Le said. “In the long run, some of these companies will have to come down.”
Some start-ups have already struck growing pains. The clang of a banking start-up was a series of outages in 2019, except Millions of customers Does not have access to their money for hours. some Coinbase Customers They said they were locked out of their accounts or experienced theft of their money. And Robinhood Faces Nearly 50 lawsuits and several regulatory investigations After stopping trading for a few stocks during a frenzy in “mem” shares in January.