If someone were to say that we live in a “post-unicorn era,” they probably wouldn't be too far off. Some have been projecting such an era as far back as 2016, and with the recent issues surrounding WeWork, it's easy to see that if the unicorn era weren't dead before, it probably is now. However, that's not to say that venture capitalists have given up trying to make at least some judiciously-selected unicorn-approximations. To that end, Centana Growth Partners has secured a range of commitments to join a new equity fund geared specifically toward the financial services and financial technology, or fintech, market.
One Big New Push in the Unicorn Graveyard
Centana Growth Partners, a private equity firm, is poised to put a lot of financial muscle behind fintech operations with a new $375 million fund. That's actually 50% larger than the fund it started back in 2015, which suggests that Centana is expecting some real gains out of the fintech market going forward and is investing accordingly.
Indeed, Centana is hardly alone here; just for 2019 through September, CNBC noted, fintech startups globally landed a collective $24.6 billion in funding. This included some funding rounds that saw nine-figure investments going into company operations. By way of comparison, the entirety of 2017 saw $18.8 billion raised for fintech operations, and that number was shattered within nine months of 2019.
Whistling Past the Unicorn Graveyard?
As much as investors are rushing to put cash into fintech bets, there are two specters of doubt looming in the background and raining on the parade at least somewhat. Those specters go by the names “Uber” (NYSE: UBER) and “WeWork.” WeWork famously lost investors piles of cash, though there are some out there who believe that SoftBank (OTCMKTS: SFTBY)—who put a lot of that cash behind WeWork—will ultimately have the last laugh. When Forbes is calling it “the most ridiculous IPO of 2019,” however, you can see where interest might be thin.
As for Uber, problems have been bursting through like icicle spikes through the deck plates of the Titanic. We took a look at some of Uber's problems back in early November, and the picture hasn't improved much since. Even back then, shares were down 38% off the IPO, and though some recovery has been seen, they're still flirting with the 52-week low. It's worth noting that Jim Cramer of “Mad Money” fame asserts that shares of Uber are actually worth buying again as of late November, a turnaround from his pessimism on Uber stock from early November.
These issues weigh heavily on investors, but for groups like Centana, there's value to be had here. Word from co-founder Ben Cukier notes that the company is actively looking for companies with “large and exciting markets,” but is primarily focused on companies with “real value propositions” to offer.
The Unicorn Graveyard is in a Great Neighborhood
What if the issue here isn't so much unicorns, as the neighborhood the unicorns occupy? Keep in mind that all this investment is plunging into the fintech market, and that could easily have some bearing on the matter. The fintech market is fundamentally changing the way a lot of people live, work and play, thanks mainly to the broad focus the market represents.
Fintech covers a lot of waterfronts. Do you do any banking online, or from a mobile device? You've got some contact with fintech. Do you do your banking with an online-only bank sometimes called a “challenger” bank? You've got contact with fintech again. Gamble online? Fintech calling. Online shopping? Fintech too. Fintech has a lot of branches, and some of these branches are increasingly popular. Just look at the impact that mobile payments services like Apple Pay and Samsung Pay have had.
It would be easy to dismiss fintech as a set of shiny new toys that won't last except for one critical point: fintech is gaining on a range of fronts and rapidly becoming the new “how did I ever live without this” technology of choice. A market so diversified will have its share of winners and losers, but for groups like Centana, putting investment cash behind them should average out positive in the long term.