When Jack Dorsey launched Square Inc. in 2009, a period of massive growth led to the company filing its public listing in 2015. Though Square raised funding in the private arena with a $6 billion valuation, when the company was listed, its share price dropped substantially and the company was valued at only $3.66 billion. Since recovered, the company’s shares are now over 425% over the original price, but it has not been an easy climb. Other successful fintech companies like On Deck Capital and LendingClub Corp have always been devalued significantly, up to 80% in both cases, when launching their public listings. Where is the Disconnect Between Private and Public Valuation Amounts?

1. Fintech startups valued at over $1 billion
due to massive devaluations at IPO
may be avoiding taking their companies public

2. Several well known fintech startups suffered devaluations of
over 80% of their private valuations
Square Inc., founded by Jack Dorsey was valued at over $6
billion in the private market
This dropped to $3,66 million when the company
went public

3. According to PitchBook, there are over 30 fintech
startups with a value of over $1 billion
These types of companies are known as ‘unicorns’ since
their success is a statistical rarity
Current research suggests that fintech startups are
overvalued in the private market by nearly 50%

4. Most fintech startups do not need to go through an IPO
as they are funded and valued during several rounds of
funding by private investors
With the devaluation that many have had to endure, many
fintech founders are rethinking their strategy.

5. An increase in regulations and in the amount of time and
effort needed to take a company public have discouraged
fintech startups from public listingthough to scale at an enterprise level some companies may
have to start the IPO process.

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