Financial technology or fintech is one of the most promising emerging sectors. Venture capital firms poured a little over $53 billion in fintech startups around the world in 2019, according to Accenture. In the US, dozens of startups are using software, AI, machine learning, cloud computing, and blockchain to provide financial services to consumers and businesses. Here we take a look at the top 10 largest fintech startups in the United States.
According to data from CB Insights, American fintech startups raised $18 billion in venture funding in 2019. The ranking below is based on Forbes’ latest annual Fintech 50 report. All of them are venture-backed, private companies.
These are the ten largest fintech startups in the US, ranked according to their valuation.
10- Root, $3.7 billion
Founded in 2015, Root is an auto insurance company that offers car insurance in 29 states. It believes that responsible drivers should pay less for insurance. The company requires drivers to download its app and turn on location tracking. The app monitors their real-time driving behavior based on about 200 variables over a specific period of time to determine their premium.
9- Opendoor, $3.8 billion
Opendoor is a San Francisco-based online real estate startup. Last year, it raised $300 million at a valuation of $3.8 billion. Opendoor buys homes directly from homeowners and sells them on its own online platform. Interested buyers can schedule self-guided tours and make offers on a home of their choice through its smartphone app.
8- Credit Karma, $4 billion
This fintech startup began its journey in 2007 as a free credit monitoring and credit score service company. Today, it has more than a hundred million users worldwide. It offers users a number of financial services including free online tax filing, credit scores, and high-yield savings accounts. It generates revenue through referrals. Credit Karma recommends credit cards, home loans, personal loans, auto loans, and insurance products to users. It has raised a total of $869 million in venture funding. It reached $4 billion valuation in the latest funding round.
7- SoFi, $4.8 billion
Founded in 2011, Social Finance aka SoFi is an online student loan refinancing company. It has since expanded aggressively to offer a wide range of services such as checking accounts, personal loans, mortgages, insurance, robo-advisory, and investing. In 2019, the San Francisco-based company raised $500 million in a deal that valued the startup at $4.8 billion.
6- Plaid, $5.3 billion
Zach Perret and William Hockey launched Plaid in 2013. Its valuation has nearly doubled in a little over a year. Investors valued Plaid at $2.7 billion in its December 2018 funding round. In January this year, Visa announced that it was buying Plaid for $5.3 billion. The company offers a data transfer platform. It allows customers to securely and conveniently link their bank accounts to various payments and personal finance apps. Users can easily transfer and track funds from their bank accounts to different apps.
5- Chime, $5.8 billion
Founded in 2013, San Francisco-based Chime is a digital bank that provides financial services through its app. The fintech startup was valued at $1.5 billion in March 2019. Its valuation skyrocketed in just a few months when it raised $500 million in December 2019. The latest funding round valued the startup at $5.8 billion. It boasts 7 million accounts as of January 2020.
4- Robinhood, $7.6 billion
Most millennials struggle to save and invest consistently. Robinhood makes it easy for them to start investing small amounts of money with just a few taps on the smartphone screen. It offers zero-commission trading of ETFs, stocks, options, and cryptocurrencies. It doesn’t require any minimum deposit to invest. Robinhood also offers checking and savings accounts with 3% interest on savings. Facing fierce competition from Robinhood, brokerage firms such as Schwab have started offering commission-free trading.
3- Coinbase, $8.1 billion
Coinbase has become the third largest fintech startup in the country. The San Francisco-based blockchain startup has raised $525 million from venture capital investors since its inception. Coinbase is a digital currency exchange that facilitates trading of cryptocurrencies like bitcoin, ethereum, litecoin, and others. It was founded in 2012 by Brian Armstrong and Fred Ehrsam.
2- Ripple, $10 billion
According to Forbes, Ripple is currently valued at $10 billion. Ripple offers a blockchain-based global payment settlement network. Its co-founders have also created their own cryptocurrency called XRP. The company wants its settlements network to replace SWIFT, which currently connects banks across the globe. Last year, Ripple invested $50 million in Moneygram.
1- Stripe, $35 billion
Stripe is the largest fintech startup in the US with a valuation of $35 billion. Founded by brothers Patrick Collison and John Collison, it’s a platform that allows businesses and individuals to send and receive payments online. It processes hundreds of billions of dollars worth of payments for small websites as well as large corporations. It counts companies like Microsoft, Amazon, Facebook, Lyft, and Shopify as its clients.