There are almost enough Emergent Fintech companies that are publicly traded to create an Index.
Here is the Index ranked by Market Cap (MC):
|Company||Symbol||PSR TTM||MC $m|
Here is the Index ranked by Price to Sales Ratio (PSR) based on Trailing Twelve Months (TTM) :
The Index Constituents. Here is my basic logic:
- I use the list from my Fintech IPO Watchlist as the starting point. I will add as we see more IPOs. Please tell me if I am missing any.
- I omitted all that are not traded on a US exchange. My sincere apologies to all the great companies that are traded on other exchanges around the world. It is simply a data problem as I explore in this rant about “In this Globalized era, why is cross border equities investing still such an inefficient market?“
- I excluded all “too small for public markets” stocks with an arbitrary line at $300m market cap.
- The trickiest thing was deciding what is Emergent (v.s. Traditional). I excluded all that were primarily offering enterprise solutions to big Banks (clearly Traditional). That is a great business model, but totally different from offering services direct to consumers and small businesses. The decision is not based on age of venture, so businesses like Fair Isaac and Fiserv make the cut.
- I included Fair Isaac because their invention of the FICO score (however flawed it might be) was disruptive in its day and they are a data analytics business and they dominate their segment.
- More controversial will be Fiserv as they make their money selling to Banks, but as it is to very small banks with what we would now call Cloud (but was still time sharing when they started) they sort of fit.
- Lending Club is in nosebleed territory at 35x revenue. That is a lot of people betting that Lending Marketplace is a network effects business with one big winner and that Lending Club will be the Facebook of this story.
- Fiserv is the unknown giant. See tomorrow’s Daily Fintech to look at what they do and what we can learn from that.