Amid a great deal of uncertainty over the last several years, fintech startups and major companies alike were only seeing their already-unprecedented growth accelerate. In an industry boasting annual revenue growth in excess of 1,000%, dozens of fintechs have listed since the beginning of 2020.
Unfortunately for investors, the companies that reaped major rewards from COVID-era lockdowns have also been the first to fall in this increasingly hostile financial environment. Stories of ongoing struggles by even major institutions like PayPal and Stripe have dominated headlines for weeks, and according to the latest analysis from The Financial Times, fintechs across the board have lost an estimated $1 trillion in value since hitting their high water marks as recently as earlier this year.
“It’s likely that in the rest of 2022 we’re going to continue to see some of these companies face some pressures,” said Global X’s Director of Research Pedro Palandrani. Among other hurdles, “rising rates are going to create challenges for companies on the lending side of things and [buy now, pay later] in particular.” Considering the still-falling metrics, including company valuation, revenue, and investment dollars raised, one wonders how many fintechs are equipped to survive these challenges.