Revolut and Atom Bank this week saw their valuations marked down by investors. But fintech’s long-term potential value is still sky-high. Prices need a breather.
Image source: Pexels/Olia Danilevich
One of the shallower reasons fintech became such a headline-grabbing trend in the past five years or so was the sheer amount of money – apparently – being made in a short space of time.
Investors spotted a gold rush and more and more wanted picks and shovels.
This was epitomised not by surging annual profits, but rather by ever-growing racy valuations on offer for the leading companies in the space.
Companies were creating ‘value’ faster than anyone could remember since the Dot.com boom two decades before.
Of course, much of this value creation was tied up in illiquid private markets with investors’ willingness to buy longer-dated assets (where returns are pushed far into the future).
Unicorn hunting, where venture capital investors looked for future $1bn+ companies, became the norm and axiomatic…