Top San Francisco Bay Area Fintechs in 2023
We covered Forbes Fintech50 before (2018, 2019, 2020, 2021), but this year feels a bit different than others.
Valuations in the public sector are down (over 50% from their records highs), and funding has declined (going back to early 2022). The financial services industry is no longer experiencing the rapid growth that seemed standard only 3 years ago.
Just like other economic downturns, there will be winners as certain companies are able to not only survive, but thrive. In this eighth annual list, Forbes laid out the top 50 US fintech companies — across a variety of sectors (insurance, investing, blockchain, B2B banking, personal finance, payments, real estate). Multiple point of analysis went into the rankings, which included product, value proposition, revenue and user growth, and leadership team.
Being from the San Francisco Bay Area, we focus on the startups making industry waves locally. Nearly half of the list was from this hub back in 2020. No Bay Area companies from the Investing or Real Estate sectors — previous years showcased RoofStock, Blend, and DivvyHomes . Here’s a quick summary of the 22 local companies that made the list:
WALL STREET & ENTERPRISE (4)
Both Addepar and Carta made this list again (featured as early as 2019), added more integrations with enterprises and growth in assets under management (AUM). Persona & Sentilink focus on identity verification and fraud prevention.
Addepar (Mountain View) — The cloud-based software platform enables financial advisors to monitor and analyze client’s holdings and streamline new user onboarding. Recent moves and milestones include acquiring AltX (data provider to 17K+ hedge funds) and $900B+ in AUM across 250 companies;
Carta (San Francisco) — Focuses on tracking & managing equity ownership (for companies, employees, and investors). Carta will expand its secondary marketplace towards real estate and private equity. Has top fintechs (Slack, COnibase, Robinhood, Affirm) as clients. Over $1B in sales in its marketplace;
Persona (San Francisco) — Identity verification platform helps companies confirm new customers at time of onboarding and for transaction authorizations. With multiple competitors focused on compliance (KYC, AML), Persona differentiates itself with a no-code program that can be customized by industry and user segment. The startup ‘5x-ed’ its customer base to 500 from a year ago and was last valued at $1.5B.
SentiLink (San Francisco) — Focused on financial fraud prevention, SentiLink uses machine learning models to predict future incidents. Preventing synthethic fraud (combining stolen SSN with fake names and real addresses) was an early win for the startup (founded about 6 years ago). New areas of coverage include identity and first-party fraud (transaction disputes). Over 320M identity checks processed last year. SentiLink works with top fintechs and banks, and was last valued at $430M';
BLOCKCHAIN & CRYPTOCURRENCIES (1)
The sector has taken a major hit over the last year, but a few top companies are hanging in there in the midst of regulatory uncertainty. Outside of the Bay Area, there are four other companies that made the list: Paxos, Fireblocks, TaxBit, and Chainalysis — 3 from New York and one from Utah (TaxBit). The common thread hovers on infrastructure and supportive services for customer-facing platforms.
Alchemy (San Francisco) — A startup that allows for reading & writing on blockchain, works with financial institutions and crypto-focused companies (such as Dapper Labs, known for sports NFTs). Alchemy has different monthly subscription levels for customers and facilitated over $30B in transactions. Totl funding raised to date is $96M with a recent valuation of $505M.
INSURANCE(3)
Insurance and technology (InsurTech) continues to trend upward, even during the current market downturn. Past companies featured included Hippo Insurance and Ethos — Next Insurance made the list before. Life insurance, home insurance, and business insurance is in high demand as climate change and cybersecurity impact multiple industries.
Coalition (San Francisco) — Also focused on cybersecurity insurance, Coalition was founder back in 2017. The startup covers all 50 states with up $15M in cyber insurance. More than 42K customers provide over $230M in annual premiums. Top investors include Ribbit Capital, Index Ventures, and Valor Equity, who have helped provide $300M in total funding (and a $1.75B valuation).
At-Bay (San Francisco) — Cybersecurity insurance and consulting services for SMBs are offered to small and medium-sized business (SMBs) concerned about data privacy, fraud, and security. Clients come from a variety of industries, such as banking, healthcare, and manufacturing. Nearly $80M in revenue from 33K customers (at ~$375M). At-Bay was last valued at $1.35B;
Next Insurance (Palo Alto) — The startup is dedicated to the insurance needs of businesses (such as general liability, worker’s compensation) and bundles multiple products into custom packages based on type of industry (e.g. restaurant vs. construction company). All states are covered except for New York, with licensing for over half of the 50 states. Nearly 80K small businesses work with Next Insurance, paying ~$77M in annual premiums.
Business to Business Banking (6)
In previous years, this category focused on B2B lending, which included companies such as Kabbage. Brex made the list before (back in 2019) and appears here again.
With recent bank collapses (from Q1), there’s a higher demand for deposit services for SMBs that feature robust FDIC coverage (over the standard $250K).
Early wins in 2023 go to Mercury and Brex, who absorbed many of the clients and deposit volume from SVB.
Brex (San Francisco) — Its corporate credit card for startups (approval & limits based company cash on hand, instead of a guarantor’s credit history) has become a stronger offering. Affiliate partners offering business services offer better rewards for travel, SaaS subscriptions, and rideshares. Deposit services (launched about 2-3 years ago) helped capture VC and business banking from tech startups back in March.
Column (San Francisco) — Born out of a bank purchase (of a one-branch national bank from Chico, CA for $50M), this tech-focused company aims to improve the fragmented offering of banking services (from multiple vendors). Early products involve custody of deposits, bank transfers, and lending. Company was founded by Plaid founder (William Hocket, former CTO) and his wife (Anne).
GoodLeap (Roseville, near Sacramento) — Up north of the Bay Area, GoodLeap has helped over 350K homeowners make ‘green’ upgrades to their homes with $13B in financing. Loans are instantly approved through an app (via contractors & vendors — 18K business in total as clients), with partner banks in the background (such as Goldman Sachs). The banks securitize the debt, sell it to investors, and monitor loan performance through proprietary software. GoodLeap has moved past solar panels to battery storage, windows, and turf upgrades. With $1.6B in funding, the startup is valued at $12B.
Mercury (San Francisco) — The digital bank for startups has locked in its place within the business banking sector, onboarding SMBs in an efficient manner and providing services such as no-fee deposit accounts, debit cards, bank transfers, and foreign currency exchange. Mercury expanded from its core revenue driver of interchange (from customer card spend) to venture, debt-based lending (up to 4 yr. terms at 25% - 50% of most recent equity raise). The startup is valued at $1.6B and grew its customer base to over 50K businesses.
Modern Treasury (San Francisco) — The payments software platform (focused on enterprises) facilitates money movement via, ACH, wires, and RTP (real-time payments). Pricing is straightforward ($499 monthly fee + $0.10 per transaction + 0.10% of volume), or can be customized into an annual structure. Secondary services include a ledger for transactions (in a variety of currencies, including crypto) and payment settlement to sub-accounts at banks. Over $3B in monthly transaction and $2.1B valuation.
Navan (Palo Alto) — Targeting travel and expense management for large companies, Navan simplifies approval processes for employers and enables spending limit controls on employee cards. Its native corporate card product (Liquid) brings in 1/4 of total revenue — the remainder comes affiliate partnerships with airlines, hotels, and other travel companies. More than 9K business clients leverage Navan, which valued at $7.25B (with $1.1B in total funding).
Personal finance (3)
The common thread for all 3 Bay Area companies is a personal credit card product (secured or unsecured). Lending as a category is difficult to manage based on multiple regulations and limits (national and state-level) — in an economic downturn, it becomes even more complex. The lack of new startups coming out of stealth with a credit product is a key indicator. Chime makes the list again, while the other two companies appear for the first time.
Chime (San Francisco) — The top US neobank established itself as a leader through its no-fee checking account, then added a savings round-up feature that automatically transfers ‘the change’ to a savings account. Other products include overdraft protection (up to $100) and getting paid early (up to 2 days). Chime’s credit builder card helps customers turn everyday purchases into a positive force in creating a strong credit history — no security deposit needed and monthly history is reported to the credit bureaus. Over 6M accounts have been opened with Chime.
Super.com (San Francisco) — Originally operating as a discount hotel reservation service (under the name of SnapCommerce), that startup changed to Super last October and transitioned to financial services. Its secured credit card (SuperCash) delivers cash-back rewards and reports payment history to credit bureaus. The startup tapped into its user base of 5M active users and cross-sold over 50K cards since Q4 of 2022. The offer in applying for a credit card comes up with every reservation request.
Upgrade (San Francisco) — The lending startup provides a personal credit card that is essentially a loan in which payment can be made in equal monthly installments to bring a total balance down to $0. The loan limits range from $500 - $25K and rewards now include bitcoin. An add-on product of a checking account is now available, which gives customers 2% cash back on daily purchases. With $600M in total funding, Upgrade is valued at $6.3B.
PAYMENTS (5)
Finishing up this year’s review is the payments sector, which is a core component for all financial services programs. Plaid and Stripe are industry leaders that repeatedly make the list — both seem to be on the cusp of going public in the next year or so. The other companies are newcomers that are niche-focused on specific verticals (such as trucking or cross-border transacting).
Mudflap (Palo Alto) — The startup offers fuels discounts for owner-operators of trucking fleets. The Mudflap Fleet Card made its debut in 2022 with additional discounts based on purchases — revenue from card spend going directly to Mudflap. Looking to capture more of the emerging FreightTech vertical, the company provides management tools to monitor & manage total fuel expenses. Its user base includes 167K companies with 500K truckers. Total raised so far of $85M has led to a $700M valuation.
Stripe (San Francisco) — The fintech payments giant continues to gain volume globally and expanded out towards new products such as banking, card issuance, and lending in the last few years. Businesses of all sizes are Stripe clients, including large firms like Target, Amazon, and Facebook. The company is valued over $9B and on the radar of a potential public offering.
Nium (San Francisco) — A global payments platform for businesses with cross-border & FX needs (such as Deel & Rippling), Nium covers 100 currencies and 200 countries as part of its network. The startup was busy with acquisitions as well — 3 companies in total (SoCash, Wirecard, Ixaris) in Southeast Asia. Last year, Nium earned $80M in revenue (over double from 2021).
Plaid (San Francisco) — Known for connecting US bank accounts for consumers, Plaid has expanded to identity verification and payments over the last year. Top customers include Venmo, Coinbase, and Betterment. After a failed $5B acquisition attempt from Visa, Plaid is estimated to be worth $13B and gaining momentum towards a public offering.
TabaPay (Mountain View) — The payments software platform caters to banks & fintechs looking to speed up transactions through payment networks. There are 14 regional and national networks that TabaPay taps into. Businesses looking to enable ‘top-ups’ (account funding via bank cards) or rapid disbursements found success with this Bay Area startup. TabaPay continues to scale with minimal external funding (only $2.5M) to 2.5K customers and $26M in revenue.
industry OUTLOOK in 2023
For each startup that has made this industry list repeatedly, there are 2-3 other companies that have declined in volume or have shut down.
The majority of fintechs in 2023 are infrastructure-focused, not direct-to-consumer.
These startups are enabling payments, banking, insurance, or blockchain to businesses and financial institutions.
The fintechs with a consumer-focused platform are established veterans (such as Chime, Upgrade) or have an exclusive distribution network for scaling (e.g. Super.com).
The key takeaway is that there are openings to growth during the downturn, but a focus needs to placed on fintech products enabling businesses to grow OR engaging a specific consumer audience with a standalone offering.
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