Predictably Unpredictable (Part II): Is Fintech Really Dead?

  1. SaaS and fintech consistently produce multi-billion dollar companies. This underscores the opportunity to build long term, sustainable enterprise value in these sectors
  2. Both groups have been equally impacted by the correction. Contrary to the narrative we’ve seen elsewhere, our analysis shows that fintech and analogous high growth SaaS has experienced similar (significant) drops in stock price and multiples
  3. SaaS trades at a premium. The delta between median trading multiples for fintech and SaaS companies have remained consistent through both the run up and draw down of the last 18 months. SaaS companies are generally ascribed a higher multiple for more predictable revenue
  4. Future growth outlooks diverge drastically. Importantly, these fintech are expecting to grow 36% less over the next year than the SaaS companies. This may be an early signal of what’s to come in the broader economy.

So what does this all mean?

We will be the first to admit that this analysis is oversimplified. Of course, there are many other factors that ultimately drive how an individual company is valued. Nonetheless the takeaway is still important.

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Medha Agarwal

Medha Agarwal

Currently @RedpointVC. Former founder, ops, and consultant. Proud @HarvardHBS @Harvard @Radlwtcrew @Bainalerts alum. Recovering New Yorker, currently loving SF