How the ranking of startups changes if fintechs come into play

Every year, Sifted, one of the main online newspapers for information on the world of startups, creates the list of them top 100 startup in UK e Irlanda. This list is made by analyzing the startups that have had the strongest annual growth rate in turnover generated in the last three years. To be considered a startup it must be a maximum of 10 years old, less than 1000 employees and still be proven with at least 3 years of turnover, and with the first turnover of at least £85,000 or the last of at least £850,000. I allowed myself to play with the numbers they presented to get a slightly different picture of the ranking than I would.

I have chosen to consider not only the growth in turnover but also the two factors that fuel growth, the number of employees and how much funding these companies have received. Looking at these two pieces of information the ranking should be very different. If you divide the turnover number by the number of employees you get an idea of ​​the company’s efficiency. The one with the highest turnover per employee demonstrates that it is able to have many customers with few resources or in any case a product that is paid very well by customers. If, however, the turnover is divided by the amount of the investment, the return on invested capital is understood. More investments should generate more turnover and therefore more profit over time.

Looking only at the fintechs on the list, startups emerge that should be much higher on the list and others that in my opinion should not be on the list because even if the turnover has grown they remain inefficient in how they use resources to generate this turnover. At the bottom of my list are the fintechs that deal with payments, in open banking such as True Layer, Bud and Yapily because they have many employees and have raised 250 million, 93 million and 60 million euros respectively but the latest turnover is less than 10% of the total collection. Always at the bottom I put the new digital banks such as Allica Bank, which was number 1 in the Sifted ranking, Atom Bank, ANNA Money which are those in the ranking which have raised the most financing by far, have hired more employees, but which have proportionally invoiced very low.

The fintech startups that for me are at the top of the list are three companies with very different business models but in all cases extremely efficient. The first is Great find, which provides a financing service to small traders who sell on e-commerce marketplaces, over the period between when they sell the goods and when they receive payments. The startup has never taken funding from venture capital, and has a rapidly growing turnover with only 11 employees. The second startup, wait, provides small and medium-sized businesses with a financing solution for their invoices, thus also anticipating the cash flows for the companies. It has 42 million in turnover with 43 employees, almost a million generated by each employee. The last one, Marshmallow it is a startup in the insurance sector, it has more than 200 employees but has a turnover of 124 million, up from 6 million two years earlier, with 300 thousand customers who have purchased a car insurance policy via the app. In the end, rankings are made to be analyzed, and the first on the list are not always the best companies. Starting up is complicated, you have to manage a lot of uncertainties on the path to growth. I think that rewarding those who manage to grow frugally, while being careful with their resources, is the right way to evaluate the sector.