It’s been a transformative year for fintech. As the COVID-19 pandemic has forced global payments to become increasingly digital, we’ve seen more companies within the industry generate highly successful years. This has led to something of a fintech IPO surge
in recent months.
Now, it’s the turn of
Marqeta to launch an initial public offering ahead of what’s expected to be a largely profitable flotation. But perhaps most significantly of all, there’s little evidence of the digital finance boom settling down as the world moves away from the health
crisis, social isolation and lockdowns.
As the chart above shows, 2020 has seen significant changes in both a positive and negative manner across the world of fintech. With customers and transaction volumes all clearly rising across the industry, it’s clear that this influx of new users is driving
growth throughout the industry.
Marqeta’s IPO we can see an example of fintech at its finest. Marqeta is a lesser known company in this ecosystem due to its infrastructure nature, but has long existed in the world of digital finance.
The company powers the payment card technology behind the products that customers use, such as Square - a leading customer and driver of the unicorn’s growth. Marqeta is a pioneering company when it comes to fintech, and it’s driven by a range of
exciting financial features like majority revenue from interchange and a competitive market. These factors make its initial public offering the perfect example of a functional company capitalising on favourable market conditions.
As citizens in nations around the world found themselves stuck indoors owing to the pandemic, it paved the way towards a natural shift in fintech adoption and contactless payments.
In fact, as COVID-19 arrived on the shores of the US, a National Retail Federation survey discovered that 19% of individuals made their first contactless payment in may, while 57% confirmed that they
intend to continue making contactless payments even after the end of the pandemic.
This boost to adoption, which has been driven by the necessity of more contactless solutions, will continue to gather momentum throughout 2021 and beyond as we begin to adapt to the era of the ‘new normal.’
Whilst traditional financial infrastructures have been hard to break down, COVID-19 has shown us that the fintechs have the ability to already deliver far greater levels of convenience to the management of our finances.
The prosperity generated by the pandemic alongside developing technology has created a favourable environment for fintechs to go public in increasing numbers. It’s hoped within the industry that the greater levels of convenience will be enough to help sustain
further growth within the industry after we begin to move away from the era of COVID-19 and brick and mortar stores and financial institutions re-open.
Assessing The Scale of Marqeta’s IPO
Marqeta’s initial public offering has the potential to deliver a valuation of over $12 billion for the company, which is intending to debut on the
Nasdaq. The timing of the IPO is particularly significant following a recent pandemic-driven surge in online shopping and food delivery transactions - alongside optimism that the digital transformation experienced during the peak of the health crisis will
remain due to its superior levels of convenience for users.
Marqeta’s looking to sell around 45.4 million shares at a cost of
between $20 and $24, the company stated in its regulatory filing. This would lead to more than $1 billion of funds raised at the top end of the range.
The listing comes off the back of an extremely prosperous year for the company that can count the likes of Uber and DoorDash among its clientele. In fact, Marqeta’s revenue more-than doubled in 2020 to $290.3 million.
Marqeta’s most recent valuation came in May 2020 at $4.3 billion, following a $150 fundraising round. The fact that this value has trebled in the space of 12 months indicates the sheer levels of growth that the company has undergone throughout the health
Despite Marqeta’s initial public offering being largely limited to institutional investors, the recent interest in technology and fintech-based IPOs has meant that online brokerages have been quick to jump on the bandwagon and offer out shares. Freedom Finance
Europe has swiftly created a portal that offers IPO participation in
Marqeta’s listing albeit with a stringent application process and a minimum financial threshold of $2,000.
Other more traditional brokerages like Fidelity and
TD Ameritrade also offer participation to initial public offerings like that of Marqeta, although these services generally require greater thresholds of $100,000 and $250,000 respectively to be met.
2020 has signified a period of rapid growth in the world of fintechs which has seen a huge volume of digital finance companies come to market to capitalise on newly profitable business models. With more consumers indicating that they’ll be willing to embrace
digital finance on a more long term basis,
IPOs like that of Marqeta may represent a strong investment opportunity for the years ahead.