Toronto FinTech startup Payfare IPO on Toronto Stock Exchange
Fintech IPOs are not as popular as we would think, but there are some success stories, along with some failures.
February 10, 2021
In this article:
- What is Payfare?
- Are there any comparable Canadian fintech IPOs?
- How do the American fintech companies compare?
- What are some of the issues with recent IPOs?
- What are some of the other reasons to avoid IPOs?
Filing an initial public offering is a way for companies to get funding to pay off debts, or expand their business. It is opposed to traditional funding routes from big investors in other markets. Payfare is just the next company to take the IPO route.
Payfare
Payfare is a Toronto based fintech company that offers software for gig economy workers. The software is used by several big companies like Uber, Lyft, and DoorDash.
They are proposing the IPO in order to strengthen their available capital in order to pay off about $21 million USD in short term debt obligations.
The leftovers will be used to help grow the business. After the TSX based IPO, Payfare plans to expand its offerings to new segments.
How will it go? Hard to tell, but there are a few comparables.
Canadian comparables
There may not be many Canadian fintech companies with the clientele of Payfare but there are a few that have gone public over the years.
Companies like Goldmoney, which helps customers access the precious metals market, and Points International, an ecommerce loyalty program with partners such as AirCanada and Air Miles are at the top of the public Canadian fintech list.
Yet both of these companies have a market cap under $300 million CAD, which makes them relatively small by stock market standards.
Other Canadian fintech companies trade shares at under $1 CAD and have even lower market caps.
It’s safe to say that there’s been limited success for Canadian fintech IPOs, leaving Payfare to fend for itself in slightly unchartered waters.
American comparables
There are more substantial comparables, and success stories on the American side of the border.
Back in late 2019, Bill.com’s stock surged 60% in the days following their IPO. They managed to raise $215.6 million USD, and their stock continues to rise a year later, hitting a high of $185 USD on February 5th 2021.
After aiming to sell shares at $33 USD a piece, GoodRx’s stock price hit $56 USD a couple weeks after the IPO, raising $1.1 billion USD in funding.
Interestingly enough, the stock has been up and down since then, just recently reaching $56 USD again.
Square and PayPal are great examples of fintech stocks that just can’t seem to lose.
IPO issues
There are definitely some reasons for fintech companies to avoid IPOs.
One example comes from Ant Group, whose IPO was rumoured to be the biggest of all time.
The chinese fintech company was valued at over $300 billion USD, and was seeking to raise $34.5 billion USD with the offering.
But 5 days before the scheduled listing, Chinese officials said that the company didn’t meet certain regulatory and disclosure requirements. Ant Group has now halted its IPO for at least six months, and is likely to see its valuation cut in half.
Other reasons to avoid IPOs
There are other reasons to avoid public offerings.
Firstly, companies may experience a lack of control due to public trading. The volatility of the markets can certainly put some companies off.
Secondly, fintech companies have recently had a multitude of investors to choose from, and they are getting all the money they need through these investments. Companies like Robinhood contemplated IPOs, but got $300 million USD in one investment round, and recently raised even more after the GameStonk debacle.
These reasons won’t stop other companies from filing IPOs. Bumble is attempting to raise $1.8 billion USD by selling 45 million shares at around $38 USD per share. This could push their valuation to $8 billion USD.
I guess it’s go big or go home.
-by Arlen Dancziger
Payfare
https://betakit.com/toronto-fintech-startup-payfare-files-to-go-public-on-toronto-stock-exchange/
Canadian public fintech
https://investingnews.com/daily/tech-investing/fintech-investing/canadian-fintech-stocks/
Bill.com
GoodRx
https://www.fiercehealthcare.com/tech/goodrx-sells-shares-above-target-raising-1-1b-ipo
Ant Group biggest IPO ever
https://www.cnbc.com/2020/10/26/ant-group-to-raise-tktk-billion-in-biggest-ipo-of-all-time.html
Ant Group IPO delay
https://www.cnbc.com/2020/11/14/why-the-ant-group-ipo-wont-happen-for-at-least-six-months.html
Why aren’t fintechs using IPOs
https://www.cbinsights.com/research/fintech-startups-unicorns-ipo-2018/
Robinhood new funding
https://blog.robinhood.com/news/2021/2/1/robinhood-raises-34-billion-to-fuel-record-customer-growth
Bumble IPO
https://ca.finance.yahoo.com/news/dating-app-bumble-boosts-ipo-113022462.html
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Who Is Matt McKeever?
Matt McKeever is a CPA, CA and Real Estate Entrepreneur in London, Ontario. On his YouTube Channel with over 70,000 subscribers and 4,000,000 views Matt discusses a variety of real estate and personal finance strategies and tactics. Including: How to BRRRR Real Estate, The Importance of Investing for Cash Flow, How to Reach Financial Independence Retire Early, Safe Withdrawal Rates, Frugality and Reducing Personal Consumption & Embracing Minimalism.
Matt began investing in real estate at age 25 by purchasing a student rental near Fanshawe College
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4 年Not if you can get in on private rounds pre-IPO! :-)