Technology continues to advance and its given rise to a multitude of new industries. Among them is fintech. The past 20 years have seen an explosion of new startups geared towards revolutionizing automation within the financial industry. With mobile access one of the strongest new trends, these companies work to create a seamless and more streamlined user system for businesses and end-users. Investors are eying some of the more recent additions to the service providers as possible inclusions in their stock portfolios. Here are five fintech startups to watch out for in 2021.
Sofi is a San Francisco-based institution that provides wealth management, loan, and refinancing services. Sofi uses a digital algorithm to determine income, credit history, and other factors including career, education, estimated cash flow, and more, to get the overall creditworthiness of an applicant. What makes Sofi a new fintech startup to keep your eye on is the fact that they're going public soon. There are plans for SoFi to merge with a SPAC backed by Chamath Palihapitiya. The total estimated value of SoFi is currently $8.65 billion. SoFi will be combined with other companies going public in a SPAC ETF for investor consideration.
4. Varo Money
Varo Money is a bank in the digital consumer category based in San Francisco. The institution relies on a digital app along with other related fintech tools to assist users to obtain a complete picture of their financial situation. The app considers spending habit analysis and is also used for making instant money transfers. A Varo debit card does not require a minimum balance and no fees are charged for transfers, foreign transactions, or overdrafts. Varo launched in 2017 and is in the process of becoming a bank. It was granted a national bank charter from )CC with approvals from FDIC and the Federal reserve under the name Varo Bank, NA. It closed a round of Series D funding that added $241 million to its coffers. There are plans for the bank to expand into new banking products as well as open new operations in the near future.
Blend is a consumer lending digital lending platform that is used to simplify the loan process for consumers. It offers them a transparent accounting of their finances. Features of Bend include fast verification of data tools for the pre-approval process. The company specializes in automation and expedition of the lending processes for car loans, mortgages, and more. The company provides business solutions and tools for major financial institutions such as US Bank, BMO Harris, and Wells Fargo for processing daily loans in the amounts of billions.
Brex is another fintech startup to keep your eye on in 2021. The company was founded in 2017 by Henrique Dubugras and Pedro Franceschi. The Silicon Valley startup first launched operations in 2018, offering corporate credit cards for startups. Brex was successful in a round of venture capital funding that secured $57 million in startup capital. Investments were used to expand its offerings to introduce a rewards program. It has formed a partnership with TravelBank for direct booking services last year. They offer a corporate credit card for e-commerce businesses. Brex plans to partner with Clear Channel for enabling discounted advertising as another service for startups. Brex provides services mostly for life sciences startups, e-commerce, and tech startups with 30-day payment cycles. A few characteristics that make Brex so attractive to these businesses is that the credit limits on average range 10 to 20 times higher with increased rewards points on specified business purchases. Brex is headquartered in San Francisco. Brex is definitely a startup to keep your eye on for 2021.
Stripe is another San Francisco startup worth watching for 2021. The company provides an internet commerce platform for payments in the software category. They offer tools for e-commerce businesses, a crowdfunding platform, subscription services, and marketplaces. Their state mission is to increase the Gross Domestic Product of the Internet. Stripe serves companies of all sizes from brand new startups to larger companies that have gone public. The software solutions enable them to manage their businesses online and to accept payments. This is a technology company that builds economic infrastructure for the internet. Stripe has already proven itself by securing a variety of online businesses including Instacart, Squarespace, Kickstarter, Warby Parker, Pinterest, and many others. All of these well known and larger companies go through Stripes payment management and online billion processes platform. Stripe is going strong and shows no sign of slowing. It's one worth considering for 2021.
Fintech startups that show promise are on the minds of investors these days because the technology they provide is currently in demand. The outlook for the demand to increase is strong. Getting in during the early stages of new fintech startups is always a gamble, but that's the nature of the investment. Some of these companies will grow into the giants of the future as they provide behind the scenes engines that power the services offered by some of the largest lenders and financial institutions in the world. If you're considering expanding your portfolio, or if you're new to investing, it's worth your time to consider the fintech industry. There are thousands of new startups in this category, but we've picked the five that have the sunniest outlook for thriving and becoming good long-term investment solutions. When deciding which is best for you, consider the contracts and partnerships of a company that adds to their overall value and stability. Look for those with contracts that take them into the future for growth and profitability potential for the lowest risks for your investment dollars.