The fintech world is a tale of two cities. After a thrashing over the last two years, some big fintech startups, such as Stripe and Ramp, have seen their valuations rebound from the lows, as business improves and investor demand rises.
A growing number of fintechs sport higher valuations than their last funding rounds. In some cases, this is because their valuations took hits as interest rates spiked. Now, as their business and investor funding has rebounded, so have their prices.
Some of the taint of down rounds has worn off as more companies have accepted these lower valuations, which can help attract workers because the startups can offer shares at a lower price, with more room to rise.
“For employees that have some tenure with a company, a down round or depreciated value can result in a perverse incentive to go ‘next door’ and get a new package that is valued at a much lower stock price but [has a] higher wealth creation opportunity,” said Aalap Shah, a managing director at Pearl Meyer.