By Oliver Smith on Thursday 9 January 2020
In Part 3 of our VC Predictions series, we identify IPOs as a key question for our venture capitalists in 2020.
The world of finance is all about making predictions on where the market will go next, so this week we’re asking three VCs well-versed in fintech investing for their 2020 predictions.
Tim Levene of Augmentum Fintech has backed the likes of ReceiptBank and Tide, Josh Bell of Dawn Capital leads the firm’s fintech investments in startups like iZettle and Divido, and Rob Moffat of Balderton Capital sits on the boards of Cleo and Wagestream.
Yesterday we found out what specific predictions these three would make for 2020. Today in our final Part 3 we ask:
What do you think the UK IPO landscape looks like for fintechs in 2020?
I don’t expect to see a flood of Fintech IPOs in 2020 in the UK.
There is more private capital than ever available to companies and as such, the incentive to go public is far less compelling.
Unfortunately, the listed market community remains half glass empty rather than half glass full, focusing on short term losses and challenges that these growth companies will always face and not always focusing on the huge potential that is ahead of them.
However, we are seeing a change in philosophy from some analysts and public market investors but we believe 2021 and 2022 will be the year(s) of the Fintech IPO.
There is certainly a big backlog of IPOs with at least 10 fintech companies at multi-billion dollar valuations, like Stripe, Transferwise, Klarna or Robinhood.
However, private investors are likely to continue wanting to write large checks for the best performing startups, meaning that the fintech "titans" may not feel the pressure to go public just yet.
Personally, I wasn't expecting a wave of fintech IPOs in 2019. Companies such as Revolut, Monzo and Oaknorth are still too early for IPO.
I think we will see some massive fintech IPOs in the 2020s but probably not this year.
To date, banks and other acquirers have not shown much interest in making major acquisitions in the fintech sector. I am not banking on this changing.
That’s a wrap for our VC Predictions series, if you missed Part 1 or Part 2 make sure to take a look below.