The news: The UK-based Centre for Finance, Technology and Entrepreneurship (CFTE) compiled a list of the 157 fintech unicorns to date (those valued over $1 billion), per its blog post.
By the numbers: Unsurprisingly, the 81 unicorns in the US are more than in all of the other countries combined.
- The next fintech hubs are China (11), UK (10), India (9), Brazil (7), and Germany (7).
Looking ahead: The US undoubtedly will maintain its vast lead for the foreseeable future, but recent developments point to a reshuffling among the next four biggest unicorn hubs:
1. China. Tech giants Alibaba and Tencent secured the No. 2 spot for China.
- These super apps combine social, commercial, and financial solutions that cater to hundreds of millions of Chinese consumers and ease their access to other fintech startups.
- As a result, Chinese fintech unicorns' average market cap is $43 billion, compared with $11 billion in the US.
- However, the government regulatory crackdown against these tech giants—and more recently cryptos and insurtechs—will hinder their growth and create a less nurturing environment for new startups.
2. UK. Despite concerns over the country’s lead raised by Brexit at the start of the year, the UK has maintained a thriving ecosystem.
- The $5.7 billion of fintech funding during H1 already exceeds all of 2020.
- Fintechs now constitute the largest share of the UK’s 100 tech unicorns at 34%, surpassing other subsectors, like health and food tech.
- The government has recently adopted a series of proposals that should support more fintechs with potential to join the unicorn club. These include bolstering the country’s regulatory sandbox environment and making public listing reforms.
3. India. While China’s crackdown has inhibited fintech growth, in India they’re thriving.
- Sixty-seven percent of fintech startups launched in the last five years alone, and they already account for 40% of all the country’s unicorns, per CFTE.
- And fintech firms from abroad such as UK neobanks Revolut and Tide are eager to expand in India to capitalize on demand for fintech solutions.
4. Brazil. In generating decacorns (firms valued above $10 billion), Brazil surges up the rankings to tie for third place with the UK, highlighting the growing maturity of its fintech sector.
- In the short term, the country is poised to churn out more unicorns: Brazil took home 70% of LATAM’s record-breaking fintech funding in Q2.
- Local consumers have become incredibly receptive to digital solutions during the pandemic, with Nubank acquiring 41,000 new customers a day in September, while trading volume through the crypto exchange Mercado Bitcoin was higher in H1 than all previous years combined.