Unicorns’ Bumpy 2016 Road

The FinTech industry had a good run in 2015, but as ever, the rearview mirror is nice for sentiment, while the key question remains what lies ahead. As Forbes reported Tuesday (Jan. 5), the startup pantheon within FinTech numbers 5,000 to 6,000 companies.

So, what subsets stand to do well in the months ahead? Companies serving the retail side of payments, where consumers are increasingly becoming used to mobile technology as a conduit to making payments, along with increasing adoption among millennials. Yet, as the financial publication noted, the success in technology does not translate into success on Wall Street. Consider OnDeck and Lending Club, which have both become busted IPOs. And Square had its own troubles coming to market toward the end of the year, with an initial offer price that came in roughly 30 percent below previous valuation rounds.

Against this backdrop, Forbes posed the question as to whether it is indeed worth it for entrepreneurs to continue swimming upstream in the FinTech market, especially when considering going public. The key points for rumination come from observance of the competitive dynamics, chiefly whether a startup is indeed building a better mousetrap than peers. And marketing is important in terms of educating the audience that a company intends to reach.

The bottom line deserves attention, and it is getting more attention from would-be investors, said Forbes, where “a long breakeven timeline should be a warning sign.” For FinTech, there’s some reassurance in the fact that venture capital provides a backdrop of sorts. But in the end, the FinTech startup must show that it can compete on some of the same metrics of investor returns and ratios as would firms in other industries. Fundamentals do matter and can set the winners apart from the also-rans.