Fierce launched its app in February 2023. At the time of my call with founder Robert Cornish, Fierce had acquired 1,000 customers in two months and had $2 million in assets under management. While this is good traction for two months of operations, the company’s performance does not justify a $40 million valuation cap. From an investor perspective, the company is overvalued.

However, I understand why Fierce’s valuation is so high. Fierce already raised $10 million from venture capitalists. If the company raised at a lower valuation cap, Robert would not have much ownership of the startup left by the time it transformed its SAFE to equity. And ownership of startup equity is an important motivator for founders.

Furthermore, Fierce can realistically give investors a 10x return. The team plans on making average revenue of $792 per customer every year. If the team’s calculations are right, Fierce would need only 50,505 customers to give this round’s investors a 10x return.

The super app market is booming around the world, especially in Asia. In that part of the world, unbanked populations are getting access to smartphones and directly signing up for super apps and other digital financial services.

The financial apps landscape is very fragmented in the U.S., though. On top of traditional regional and national brick-and-mortar banks, there are already 66 neobanks in the U.S. And the U.S. super app market is just starting to grow. But Americans are used to having multiple apps to manage their finances and might not want to install a super app. Therefore, the growth of super apps in the U.S. will not be as fast as it is in China, and the market will likely not be a monopoly.

There is still potential for super apps to succeed in the U.S. under several conditions. Super apps like Fierce will have to build trust with their customers and be transparent about how they manage customer data. They will have to be more agile than big banks. This gives an edge to startups on the market, as they will be more prone to integrating competitors’ services. This helps them reach a larger set of customers. 

The biggest market driver might be the cryptocurrency trend. Crypto customers are used to digitized finances and want to have the ability to quickly check and easily monitor their (often volatile) portfolios.

Building a super app like Fierce is not easy, but the company’s team has the right experience and network to do so.

Founder and CEO Robert Cornish has experience working as the chief information officer at the New York Stock Exchange. From that time, he developed technical skills and gained knowledge that are now essential to build Fierce. He also worked as the chief technology officer at Gemini, a cryptocurrency exchange, where he hired Phillip Hoffman as the head of technical program management. Phillip is now the chief operating officer of Fierce. 

The team has an excellent combination of technical background and experience in the financial industry. For example, Fierce’s Vice President of Infrastructure Lou Madia worked as vice president of systems for Nasdaq. 

Fierce’s experienced team is one of its biggest strengths. And it’s a good sign for investors. At the early stage, the team’s execution capability is more important than the market or the product, as they can pivot quickly if needed. 

However, investors should note that at the time of this report, no team member has any marketing or customer acquisition experience. This is a gap that may slow down this business-to-consumer company.

There aren’t many super apps in the U.S. And there are widely varying opinions about their potential success. But a few players are entering this brand-new market, and their success might whet the appetite of American customers.

PayPal launched its super app in 2021. It allows customers to pay bills, save their money, shop, and manage their crypto accounts. PayPal has the advantage of being well-known and already trusted by the population, while Fierce has to build its own brand reputation from scratch.

M1 Finance is also one of Fierce’s competitors. M1 customers can have a checking account and a credit card, manage their loans, and invest through the platform. It also provides interest on  cash customers’ deposits (though 1% less than Fierce).

Customers who do not want to use the banking and investing tools of super apps but do want to aggregate all of their accounts can use Inuit Mint. Even though Intuit Mint and Fierce have different value propositions, the two startups will initially attract the same customers. Customers  usually look for an aggregator before they look for a new bank or super app.

Fierce can succeed if it can link more accounts and build more financial capabilities in a shorter amount of time than its competitors. Given the team’s experience and recent $10 million funding, it is clearly possible.

Fierce’s performance is satisfying for an early stage financial startup. The company raised $10 million from institutional investors and angels, which has allowed it to build its product. The  company started in February, and when I talked with founder Robert Cornish and COO Phillip Hoffman in early April, it already had 1,000 customers and $2 million in assets. This is a very promising start.

The super app market is still emerging in the U.S., which poses adoption risk for Fierce. The company is also launching right after the collapse of Silicon Valley Bank, Signature Bank, and Silvergate Bank, when customers are likely to distrust financial institutions. This might push customers to stay with well-known and apparently stable banks and thwart Fierce’s success as a neobank.

Fierce also faces a lot of competition. To survive, it will need a great marketing strategy. The team has a marketing plan, but I am worried by the team’s lack of experienced marketers. 

Finally, even if the fintech acquisition space is very dynamic, investors should keep in mind that most acquisitions have prices lower than $400 million, which is the valuation at which Fierce would need to get acquired in order to give investors a 10x return on their investment.

Fintech is a good space to invest in — as long as investors bet on the right horse. In 2022 alone, there were 371 fintech acquisitions around the world. Even if this number is down from 512 in 2021, it shows that Fierce is evolving in a market where exits are common. The top 20 acquisitions were all unicorns (startups valued at more than $1 billion), and most were American. 

Fierce shows great traction as it just launched its app. I tried it and the user experience is great. I expect no less from such an experienced team. The team also has a well-prepared growth strategy, which is critical. Many founders just launch their product and hope that the market will like it. While a plan doesn’t guarantee success, it shows that the team is well-prepared and thorough.

It will all come down to Fierce’s product and performance.

Super apps are hot around the world, but not as popular in the U.S. If you believe that Americans will join the trend and want to aggregate their financial accounts in one app, then Fierce is a great candidate for investment.  

The team is experienced and executing quickly on a great product. They have a clear road map and will improve their product considerably in the next few months. Considering the company’s high valuation — which may limit investors’ returns — and the adoption risk, Fierce is a Deal to Watch. 

Report written by KingsCrowd Senior Investment Research Analyst Léa Bouhelier-Gautreau on April 21, 2023.