1/ current neobank/broker landscape 🧵

(both public & private)

2/ public neobank/broker market caps since ipo:

$SOFI -21% ($8.7B -> 6.9B)
$NU -54% ($41B -> 19B)
$HOOD -72% ($32B -> 9B)
$DAVE -79% ($4B -> 860M)
$COIN -80% ($86B -> 17B)
$ML -86% ($2.9B -> 420M)

3/ private neobank/broker rounds in 2021:

Public $1.2B (Feb 2021)
Current $2.2B (Apr 2021)
Revolut $33B (July 2021)
Chime $25B (Aug 2021)
Varo $2.5B (Sept 2021)
N26 $9B (Oct 2021)

4/ varo cash burn and runway not looking so good

neobanks are CAC (burn) machines if you are to acquire customers at scale w/ millions of users

5/ as a category, I think two credible paths going forward:

1) when IPO markets unfreeze (maybe next 2-6mo), go public to raise capital and take the valuation cut now

2) reduce burn to have 2-3yrs runway to grow closer to prev valuation highs

6/ if you raised at low enough absolute valuation (e.g. $1-3B), you have a path to grow into over time:

$SOFI = $7B mkt cap
$NU = $19B
$HOOD = $9B

those with $10-40B valuations likely have a tougher time to retrace ATH

this is just mathematical. not a judgement on the biz.

7/ after a decade of experimentation - turns out public mkt appetite is quite low for neobank/broker models

even where LTV/CAC, unit economics, gross margins are good and no balance sheet risk

just look at square/cash app. single digit EV/GP multiples

8/ ultimately public mkts are the arbiter of multiples that all venture (growth, early, seed) have to adjust and calibrate valuations and expectations to

consumer banking is a scale biz

top 4 banks in the US have ~50% of deposits?

I suspect big neobanks will get bigger

(also @jmover plz don't be mad at me that I called $ML a neobank here - just giving examples don't shoot the messenger !!)