At the height of the global COVID-19 pandemic, fintechs allowing people to work and do business from home found themselves suddenly thrust into the spotlight. Overnight, the companies that facilitated critical financial transactions were essential for daily life, and companies formed during the global lockdown enjoyed immense fiscal rewards.
As of 2023, with the pandemic quickly receding into memory, those companies have experienced a rude awakening. According to the most recent data from the Fintech IPO Index, the average performance of 46 major companies has been down over 53% since their public launches, representing dismal prospects for longevity for all but three companies that currently trade higher than at their IPO.
“We are fundamentally governed by yield and risk management. So we must maintain the risk frameworks that we’ve signed up with our capital partners,” said Affirm Chief Executive Officer Max Levchin in a recent conference call on the state of the industry. “These are not transactions that will disappear forever, but they’re probably going to remain muted for what we expect is at least a few quarters.”