Will Stripe, Plaid and Klarna IPO this year?

Hey, Fintech Nerds 👋,

The Synapse Evolve drama is never-ending. It appears that Evolve outsourced its record-keeping to Synpase, and now nobody knows what the true state of accounts is.

The first job of a bank is to know the state of accounts and deposits. I’ve seen bank CEOs fired for failures of this magnitude.

This is ugly. There will be regulatory repercussions.

Visa announced everything from swipe to debit, credit, or BNPL. It's a game-changer: making every device a POS so everyone is a seller, a new tokenized loyalty service, and tap to authenticate anything. There is so much to unpack! It might have to be a future Rant.

Google announced an AI-powered scam detector this week, and it will finally work with Gmail (hurrah!) - I think I prefer that to AI’s acting as NPC’s and having a little chat with each other (ICYMI the OpenAI GPT-o demo)

Here's this week's Brainfood in summary

📣 Rant: Will Stripe, Plaid and Klarna IPO this year?

💸 4 Fintech Companies:

1. Swap - Operating system for e-commerce

2. Korzo - Gen AI Money Buddy 

3. Moneykit - Plaid for Plaid (and everyone else)

4. Carputty - A line of credit for vehicles 

👀 Things to Know:

1. Visa’s new initiatives are all bangers

2. Grab (Uber for APAC) announces profitability growth driven by Fintech.

3. Google made a scam stopper with GenAI and I love it.

📚 Good Read: Stripe has gone multi-processor. But its implementation is weird.

🕊 Tweet of the Week: NY is still the Fintech capital of the USA

Welcome to Fintech Brainfood, the weekly deep dive into Fintech news, events, and analysis. Join over 40,000 others by clicking below 👇

Weekly Rant 📣

Growth is back. But what about IPOs?

Oh, how times change. 18 months ago, Fintech was over; it was going to get regulated out of existence, and in the end, the banks would win.

Reality has an annoying habit of being messy and more complex than simple narratives. After 2021's mania, we saw down rounds, bankruptcies, regulatory action against small banks, and layoffs, and we're still seeing companies looking to exit at a loss. 

This was a painful medicine,

But in the past weeks, we've seen

• Altruist raise at a $1.5bn valuation

• Ramp reported that ad spending is up 40% YoY at growth companies (suggesting they're trying to grow instead of cutting costs).

• Chime, Klarna, and Plaid feel like they're on their "IPO Ready" press tour

• Speaking of Ramp, they just raised at a valuation nearing their Fintech bubble peak (!!)

• Don't forget that Bilt Rewards raised at a $3.1bn valuation in January too.

• Plaid's CEO said they've seen a 65% increase in new Fintech companies registering this year compared to last year.

Sometimes, I see data points like these float by, and they feel connected. Here's what is going on.

• Tech growth is back, driven by fundamentals more than just an AI boom.

• Fintech has outperformed the market, again driven by fundamentals.

• This has brought growth rounds back to a different type of company.

• There's a line forming at the IPO window.

• Driven by revenue at a lower multiple, but where companies have grown into their previous valuations.

• But this is driven by a US economy, which is defying gravity, there's a reason to be cautious.

• Still, over the longer term, never, ever, bet against Fintech.

So lets unpack this.

1. Growth is back across all of Tech

2. Fintech has crushed, outperforming the stock market

3. Klarna, Chime and (maybe) Plaid are flirting with the IPO market

4. Growth rounds are back

5. A word of caution

6. But never bet against Fintech

1. Growth is back across all of Tech

According to Ramp, advertising spending is the fastest-growing category, and NASDAQ has been up 32% over the past 12 months. While Tesla and Apple stumble, Microsoft, Meta, and Google have great earnings results. 

You could argue this is the AI hype translating to earnings for Microsoft, Google (and, to some extent, AWS). Nvidia stock is also hovering near incredibly high levels, but that's all backed up by Capex spend.

The lesson from the market is that there are two types of companies: those trying to cut costs with declining sales (Apple, Tesla) and those investing massively to grow (Meta, Microsoft, Google). 

This reality is coming to the private markets too. Notice has an index of the 50 largest private companies (e.g., OpenAI, Stripe, Databricks), and year-to-date, they're outperforming the NASDAQ.

While the tech industry as a whole is experiencing growth, Fintech is crushing.

2. Fintech has outperformed the stock market.

Just about every Fintech stock took a pummelling in 2022, losing 80% to 90% of its value. A decent chunk, however, has started to move back the other way.

• Coinbase stock is up 276% over 12 months, trading near its IPO price.

• Affirm up 192% over 12 months

• Robinhood is up 95% over 12 months

(Data from Marketwatch)

In that time, the mighty Chase was up just 40%, Citi 35%, and Visa 16%. Sure, volatile stocks will be more volatile in good times and bad. But that's not the point. 

Sure you could discount some of this performance to Bitcoin being up, and stocks close to that doing well (Robinhood, Coinbase). The bigger point is the valuation norms have reset to something much more realistic than 2021's mania, and growth companies are growing.

When Fintech public stock prices are good, investors and founders in the private markets are tempted to go public.

We're now missing a generation of companies delivering high growth in public markets.

There's a line forming at the IPO window.

3. Klarna, Chime, Plaid, and others are flirting with the IPO market.

If the Fintech class has popular kids, it's Plaid, Chime, and Stripe. These companies dominate mindshare partly due to execution, branding, and, in large part, really good PR.

A lot of that is due to needing to build a narrative and momentum in the eyes of mainstream financial press and investors, but there's also a cap table full of existing investors looking for an exit. 

We will start to see Fintech companies IPO in the next 12 months, and when we do, we'll see them price and validate the Fintech opportunity for investors. While Stripe might never IPO and just stay private because YOLO

a) Klarna is not being subtle about the possibility of an IPO coming. In the past two months, headlines from Bloomberg, CNBC, Fortune and Reuters have quoted the CEO saying "it's coming soon." Given the recent share performance of its major rival Affirm, the timing could be good.

Affirm reported revenue up 51% YoY and an adjusted operating income of $79m (up from a loss last year). Klarna, meanwhile, has been on a rollercoaster, from a peak valuation of $40bn, down to $6bn, back up to $15bn, and finally looking to IPO.

Klarna had a difficult time with US market entry; they had to hire aggressively, and it took a long time to build a credit model that worked for the market. That soured their financial progress just as Fintech became a category investors wanted out of. 

Since then, they've seen much better performance in the US. The risk worked. They've also been on point with their PR. Examples like how they use AI "to do the job of 700 staff" briefly became the talk of the industry (even though everyone is using GenAI for Chatbots 2.0, Klarna's PR execution helped them win mindshare).

Much of Affirm's performance can be attributed to the launch of its card and the rise in interest rates. Rising rates usually mean customers struggling to repay loans, yet in that time, Affirm has also improved its credit quality and nonperforming loan ratios. I've written before: BNPL is Good; I will die on this hill.

If Klarna can replicate this trend, their timing might be excellent.

In orthodox economic thinking, rising interest rates should have made banks profitable (they did) and made tech stocks a bad idea. Initially, Fintech corrected, but now it has led to companies benefitting massively. 

The lesson here is great growth companies adjust to the macro and benefit from it much faster than incumbents.

If there's a risk to BNPL, it might actually be when interest rates go down. We're unlikely to see another ZIRP-pandemic-everyone-buy-a-Peleton-era boom to drive growth for them, and the profit is coming from higher rates. 

b) Chime published its recent data. In a recent Forbes piece, Chime announced it had 7m active users, $1.5bn annual revenue, 1/3rd cost to serve of a traditional bank, and was soon to launch lending and ETFs. This is the kind of thing you do when you're aiming to get the market excited ahead of a possible IPO.

(h/t Zach Noorani for the image)

The timing could be good. 

In case you missed it, Dave and MoneyLion, arguably Chime's most likely competition in the public markets, are up 915% and 263%, respectively. Dave's performance is driven in large part to its ability to get lending right.

Companies bend over backward to be seen as technology companies rather than lenders because they fear the "lending multiple" that banks receive (i.e., Lenders' market cap is often a much lower multiple of their revenue than that of technology companies).

As a company that is primarily a payments business today, that would be less of an issue, but as it moves more into lending, that could change. 

Their challenge will be executing the product extension. Saying you'll launch lending and ETFs is one thing; getting people to use them is another. Chime has also been aggressively low-fee compared to international peers (like Nubank or Monzo). So, let's say they do launch new products. Will they monetize them effectively?

Lastly, we saw the CFPB hit Chime with a fine for delaying refunds, and the risk of regulatory action is non-trivial for the whole Neobank, payments, and wallet sector. But while these headlines get people talking, they're rarely existential. Consider how Robinhood has been repeatedly punched in the face by regulators, or the fact that it's a regular occurrence for banks.

Regulatory pushback isn't a sign Fintech is broken. It's a sign it has arrived and has to play by the same rules as everyone else.

If Chime can hit profitability, extend the products they offer, and make it to IPO, that has to be classified as a successful milestone. The journey is a long way from done, but Chime can already take credit for changing the default user experience and pricing in low-income.

And the market is hungry for growth.

c) Plaid has spent more time with the mainstream press. This interview with CNBC felt like something you'd see from a public company CEO (like Robinhood or Affirm) or something John Collison would do. Plaid is, for better or worse, the trendsetter for Fintech infrastructure. Despite having numerous competitors, their brand, execution, and PR have been on point consistently.

Their attempted acquisition by Visa validated Fintech as a category in the eyes of many pure tech investors. The DoJ's rejection of that deal and their move into pay by the bank may also end up being the best thing ever happening to them (and payments).

Plaid also has a non-trivial execution challenge. Is it an identity, KYC, and risk play? Kinda. Is it a payment made by a bank company? Almost (although Stripe is quietly doing very well here). Don't forget Visa and Mastercard will want a piece of this, and the banks all want to get paid.

Do they have enough revenue? Can they justify the $13.4bn valuation at the last round? How much to investors want out?

Plaid is the kind of company that just seems to execute.

As Plaid goes, often Fintech goes. 

4. Growth rounds are back.

Private markets tend to lag the public, but the public stocks of Fintech have done incredibly well; investor appetite returns.

Interestingly, the type of company has changed in some cases, and how they're delivering growth has changed compared to 2021.

• Altrust is a custodian for registered investment advisors (RIAs). It's now the third largest behind Schwaab and Fidelity and grew revenue by 550% last year.

• Bilt Rewards is capitalizing on the 30-something renter class with a loyalty, cards, and payments model that has the potential to be one of the best loyalty moves since airmiles cards.

• Securitize raised $47m led by Blackrock, to make Money Market Funds available 24/7.

This isn't just another Neobank, vertical SaaS, or embedded finance thing. It's everything else. 

There's also the iceberg of other great companies that aren't as consistently covered by Fintech media or click-generating for newsletter writers (👀). Companies are crushing in revenue growth, lining up their next round, default alive ++, and looking to grow.

Expect to see much more of that in the coming months.

5. A word of caution.

The growth moment might be temporary.

The US economy has defied expectations and gravity, largely driven by stimulus spending, an AI boom, and an immigration dividend. Interest rates remain high, and regulators are alive to the threat of Fintech as much (if not more) than the opportunity.

The AI boom is losing momentum. Nvidia just crushed earnings, and the stock sold. It's profit-taking time for the crowded trades. Narrative matters. We're also heading into an election where the US immigration picture could change.

Many big Fintech winners have benefitted from a higher interest rate environment. While it appears we're living in a "higher for longer" new normal, there's a risk what goes up could also come down. 

What does that mean?

Timing an IPO is hard. Plenty of companies are due to IPO, but the macro environment is still very uncertain. This is why we're seeing so much press flirtation. If the US economy can continue on this strange, weirdly positive path, we'll start to see S-1 fillings soon.

Timing a growth round is a little easier (temporarily). Growth funding is no longer frozen, and with that category of financing unlocked, those companies that are delivering on their targets can finally get their next round.

There's the odd category of companies on life support. There are companies whose revenues are treading water, stuck in the valley of death, where insider rounds and existing backers keep the company on life support. In this case, nobody wins long-term, founders get diluted, and VCs kick the can down the road.

We're not out of the woods yet on bankruptcies and M&A. Some companies' runway is dwindling, and they are running out of good options and will continue to struggle. The delayed impact of tech correcting in 2022 is still washing out.

So yes.

Growth is back.

But not for everyone. 

The market has bifurcated, with the top 10% and 1% marching ahead. Growth has returned to the companies that can deliver. As Frank Rotman says, Darwin has returned and there have been losers, but also winners. 

And Fintech is class-leading.

Never bet against Fintech

Fintech companies each have a unique journey and set of struggles, to grow, hit their next milestone, deal with regulation, changing macro, and just keeping the lights on.

But Fintech as a category. Keeps defying expectations.

Only enterprise tech has more unicorns than Fintech. With Plaid, Chime, Klarna (and maybe Stripe?) joining soon, this is about to become the biggest category in tech.

And you're sweating it anon?

Yes, Fintech is a dirty word in some regulatory circles, and there are clearly gaps to close.

But the creativity hasn't stopped.

Just take a look at any of the 4 Fintech companies.

I cover these every week because they're how you force your brain to accept new ideas and ways of doing things.

Things are never static.

ST.

4 Fintech Companies 💸

1. Swap - Operating system for e-commerce

Swap is a platform that manages all shipping, logistics, import taxes, returns, and recycling for international e-commerce businesses. The idea is to have Shopify at the front and Swap at the back.

🧠 Returns fraud and tax admin is a massive burden, and shipping internationally is becoming a default for ever smaller merchants. Companies want Amazon scale logistics, but it's hard to get there without Amazon scale. Returns fraud is also a huge issue, and centralizing helps manage it much more effectively. The site, the proposition, and everything about it feels high quality. Watch this one.

2. Korzo - Gen AI Money Buddy 

Korzo is building an SEC-registered "AI Pal" for your money. The product is in early access beta but use cases would include financial planning. The brand and value proposition is aimed at the female audience. Their blog focuses heavily on that imagery, and in a way, it's leaning into a marketing idea that a "friend" for your money is useful.

🧠 If this goes live and scales, regulators will be all over it. We know regulators want to ensure machine learning in lending is explainable. Will the SEC want the same for investment decisions? They've been blogging since mid-2023, so this isn't a new business. 

3. Moneykit - Plaid for Plaid (and everyone else)

Moneykit is a single API for multiple aggregators, and claims to connect to 15,000 banks, cards and accounts. This solves a connectivity issue where some aggregators or institutions are unavailable breaking the user experience for onboarding or pay by bank.

🧠 The waterfall every team had to build in-house is now an API. Because we all know there's no one API aggregator with 100% coverage, companies at scale often build waterfalls that try one aggregator, then the next, and then the next. The goal is to improve the connectivity and user experience. The problem is that these waterfalls become complex to maintain and change over time. The quiet part out loud about open finance is it's a constantly shifting battle for connectivity, uptime, and who gets paid.

4. Carputty - A line of credit for vehicles 

Instead of taking out a lease, Carputty gives users a line of credit (up to $250k) to spend on almost any vehicle transaction. The goal is to allow users to negotiate as cash buyers and avoid the pain of multiple lease applications. The service also uses "AI-powered" valuation tracking to maximize the buying decisions and potential ROI on vehicle purchases. 

🧠 This is ideal for the multi-car family. Buy multiple cars outright, see their current valuations in the app, and pay one line of credit over time—like a mortgage for all the cars you'll ever own. I love the reduction in cognitive load and wonder what else a consumer line of credit would work for. 

Things to know 👀

1. Visa’s new initiatives are all bangers.

Visa announced at least 10 new initatives at their Visa Payment Forum, which almost had the feel of an Apple or Google developer day. They announced.

• 👉 Choose credit, debit, or BNPL at the swipe/point of sale.

• 👉 Tap-to-everything. Pay Any mobile device is a POS device and can accept card payments. Confirm: Authenticates identity shopping online. Add Card to wallet or app and P2P payments

• 👉 Passkey support to use device / biometric Auth for payments (e.g. click to pay, then instantly trigger a face ID)

• 👉 Launching A2A (pay by bank in the USA) with a real-time fraud prevention software solution.

• 👉 Visa data tokens (user permissioned data sharing with merchants for loyalty)

🧠 Choosing how to pay at POS will become a default feature. Imagine swiping with your Airmiles card for the points, but also being able to pay in 4 with your bank. Chase and Monzo have done this well, but now everyone can have it.

🧠 Any device can accept payments, this makes everyone a seller. If all you need to get paid is a mobile phone, this will enable a new generation of Square / Shopify-like experiences. This ultra-micro-merchant model is huge in APAC and India and can go further to displace cash in trades like plumbing and joinery.

🧠 Tap to confirm or authenticate is huge. At an e-commerce checkout, up pops your mobile app. You authenticate with Face-ID or a fingerprint. Bam, you have much more secure e-commerce. This existed in Apple Pay but belongs at the network level. If adopted it will reduce fraud and remove friction and POS. But imagine tap to apply for a loan or tap to rent a car. It’s authentication of all sorts.

🧠 Tap to add card will remove friction, prove your address (because the card was sent to your address and the device is there), and add security all in one. (Instead of texting "hiramp" etc). Will increase onboarding conversion. PS. Monzo did this in 2016.

🧠 Passkeys and data tokens radically change e-commerce and loyalty. The BNPL services drive more conversion and repeat spend with their data moat. Making that work at the Visa network level is powerful and adds a layer of interoperability and privacy (being tokenized). Merchants request a data token from the bank, who can supply it if the user opts in (probably earning the bank a fee). The merchant can then target offers or build bespoke checkout flows with this data. It’s open banking during the e-commerce journey.

🧠 Don't sleep on Visa doing pay by bank. Stripe is the current leader IMO, but the network effects, standardization and fraud reduction will be a huge boon for adoption.

🧠 All of these are only as good as their adoption. Visa has a history of announcing things like wallets that never catch on. But usually, when they do something at the tokenization and network rules level, it's a matter of time until it’s a standard industry practice.

I could write essays about each of these.

2. Grab (Uber for APAC) announces profitability growth driven by Fintech.

APAC superapp Grab announced $658m revenue and $180m adj net profit with guidance raised to $250m in their forecast. This was driven by a lower cost of payments, from switching users away from cards to “on us” wallet transactions and a relentless focus on cost reduction. Their lending products remain strong with non performing loans (NPL) at less than 2%.

🧠 Closed loop wallets dramatically impact unit economics. This is why Venmo and CashApp want merchants to adopt their own brand payment type. This is more successful in APAC because there are more long-tail and micro merchants who already use Grab for other services.

🧠 Grab is what would happen if Venmo and Uber had a baby. Users can book cars and flights, order food, get a loan and insurance, make P2P payments, and even get a car loan. The super apps become an “everything app” in a way we haven’t seen in the transatlantic world.

3. Google made a scam stopper with GenAI and I love it.

Google will use its Gemini model to detect possible scams during phone calls. It’s screening for trigger words like “gift cards” or “password sharing” from people claiming to be from a bank. It will then pop up an alert to try and break the spell of the scammer.

🧠 This is the kind of no BS, useful today feature we need. I use Google's "suspected spam" call screening service once or twice per week.

🧠 Most scams and fraud come from social media and search. I want Meta platforms to build similar AI, and we need to find a privacy-centric way for companies to share this intelligence.

🧠 I hope they make an API to this AI. That way banks and other 3rd party software can be alerted if a call could have scam implications ahead of a payment to prevent fraud.

🧠 The privacy model is solid. The immediate "OMG GOOGLE IS LISTENING TO MY CALLS" crowd is likely to hate this, but the reality is the AI runs locally on the device (which means you need a relatively new Pixel phone for it to work).

🧠 Google will also bring Gemini to photos and Gmail. Most of our lives, our insurance documents, wills, and taxes exist in Gmail. This could be huge for Fintech use cases if there's an API to it.

🧠 Consider how much Revenue Google gives to Apple to be the default search. Can you imagine them doing the same for AI? I can. Imagine if Siri was powered by Gemini, and iOS supported scam stopping features.

Good Reads 📚

1. Stripe has gone multi-processor. But it's implementation is weird.

TL;DR, Many big Stripe enterprise customers want to use Stripe at the front but someone else at the back. Whether it's for better acceptance in markets like South Korea, pricing, or just redundancy, this is a natural evolution for Stripe and its customers. Jareau points out that Stripe's new API acts as a reverse proxy, limiting statefulness. For non-developers, this means Ops teams cannot manage things like returns or refunds through the Stripe dashboard as elegantly as they do today.

🧠 This is a good evolution for Stripe and natural counter-positioning to Adyen. Adyen has historically been much more tightly integrated (and aims to deliver better unit economics through the "single global platform" and the fact that it is a bank). Stripe's risk is that as enterprises get larger, Stripe's "one complete high-performing developer experience for payments" value proposition diminishes. Bring your own PSP, but with all of the Stripe value-add (like billing or checkout), it is a savvy move.

🧠 The lack of polish is very un-Stripe-like. The rise of payment orchestration platforms and specialist tokenization providers (e.g., VGS, Basis Theory) allows enterprise merchants to solve ops issues more elegantly in a single dashboard across multiple PSPs than Stripe's new solution. 

Further reading: 

1. 🧠 The Token Layer Cake

2. 🧠 Are payments a race to the bottom?

🕊 Tweets of the week

That's all, folks. 👋

Remember, if you're enjoying this content, please do tell all your fintech friends to check it out and hit the subscribe button :)

(1) All content and views expressed here are the authors' personal opinions and do not reflect the views of any of their employers or employees. 

(2) All companies or assets mentioned by the author in which the author has a personal and/or financial interest are denoted with a *. None of the above constitutes investment advice, and you should seek independent advice before making any investment decisions.

(3) Any companies mentioned are top of mind and used for illustrative purposes only.

(4) A team of researchers has not rigorously fact-checked this. Please don't take it as gospel—strong opinions weakly held 

(5) Citations may be missing, and I've done my best to cite, but I will always aim to update and correct the live version where possible. If I cited you and got the referencing wrong, please reach out