The newly minted F-Prime Fintech Index explores the merits of fintechs operating in banking, payments, insurance, real estate, lending and asset management, according to an announcement from the venture capital firm.
“Fintech disruption has grown tremendously for the better part of a decade. Fintech startups are now raising more capital and a record number are exiting into the public market. For the first time, we have enough publicly-traded fintech companies to construct a meaningful Fintech Index,” said David Jegen, managing partner of F-Prime Capital’s Technology Fund.
According to F-Prime, 2021 saw a swarm of fintechs transition from private to public. As such, 77 global fintechs accomplished that transition via initial public offerings or through special purpose acquisition companies (SPACs). Of the 77 companies that went public, 20 of them did so via SPAC.
SPACs are companies with no actual commercial operations of their own. They are formed specifically to raise capital toward a merger or acquisition, explains Investopedia. Often times, SPACs are referred to as “blank check companies,” adds the informational resource. In 2010, only two such companies existed; in contrast there were 295 SPACs formed in the first quarter of 2021 alone.
Further highlighting the economic breath of emerging public fintechs, F-Prime reported more than 300 funding rounds of more than $100 million poured into fintech startups in 2021. This accounted for close to 35% of all venture capital funding last year. “We believe this is only the beginning. To see the scale, transparency and potential of these businesses, we want to accurately collect and benchmark the growth of the industry by creating an index to track the leading disruptors,” Jegen said.
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At inception, the F-Prime Fintech Index featured 54 public companies, each with a market capitalization of at least $1 trillion at the end of 2021 and listed after the year 2000. According to the venture capital firm, the index will be rebalanced quarterly. Existing companies and potential additions to the list will be evaluated based on the criteria listed below.
- Capitalization: securities require a minimum $250 million market capitalization
- Liquidity: securities require a minimum “three-month average daily dollar trading volume” of $5 million
- Seasoning eligibility: securities must have “seasoned for at least three months on an index-eligible exchange”
- Growth: companies require annual revenue growth of at least 15% over the last two fiscal years
In addition to the new index, F-Prime also released its 2021 State of Fintech Report. That report, which analyzes both private and public markets, along with providing trends and sector insights for 2022, can be found here: https://fintechindex.fprimecapital.com/.
