How Top Companies Are Shaping the Future of Financial Technology

In the startup world, we often hear about startup mafias like the “PayPal Mafia” – the group of PayPal alumni who founded and led some of the most influential companies of our time – think Elon Musk, Reid Hoffman, Peter Thiel, Max Levchin, and more. Silicon Valley arguably came into being as a result of another mafia: the “Fairchildren” – the group of founders that spun off Fairchild Semiconductor. According to the Computer History Museum, “Although the company’s market value never exceeded $2.5 billion, the combined worth of its surviving descendants is estimated to be more than $2 trillion.”

In my book Surpassing Innovation (HBR), I wrote about the rise of a few emerging market mafias, emerging from first-generation leaders like Mercado Libre in Latin America and Aramex in the Middle East. A recent study conducted by Gilgamesh Ventures and the Wharton School of Business aimed to extend this research, focusing specifically on fintech. The results are fascinating, revealing what they call “Fintech Families” – a generation of fintech powerhouses that are driving entrepreneurship worldwide.

The Fintech families: a new force in innovation

The research identified 15 fintech companies, dubbed “Fintech Families,” that have produced an outsized number of founders. These companies, all founded after 2000 and with revenues of more than $250 million, have collectively produced nearly 3,000 founders worldwide.

The list of Fintech Families includes household names like Square, Stripe, and Robinhood, as well as Latin American giants like Mercado Libre and Nubank. But it’s not just the quantity of founders that’s impressive — it’s the quality and impact of the companies they build.

The DNA of Fintech Family Founders

To give you an idea of ​​the types of companies being founded by Fintech Family Alumni, see below:

Who are these founders from the Fintech Families?

Product and engineering roles were the biggest source of talent, with a whopping 50% of founders coming from this background. They weren’t the only ones. Strategy and business operations roles were also well represented.

These family members did not stay in the same field. Most alumni of these companies have gone on to found companies in other sectors. This speaks volumes about the transferable nature of the skills and mindset developed at leading technology companies.

How Fintech Families Are Created

So, what creates a Fintech Family? While there’s no simple formula, the research suggests that strong brands play a critical role. Companies that can attract top talent and build nationally or internationally recognized brands seem to be the most fertile ground for future founders. I suspect that looking at the data, sufficient liquidity events also help – companies with meaningful secondary offerings (e.g. Stripe) or IPOs (Mercado Libre) give the next generation the financial freedom to experiment – ​​and their peers the ability to invest. I’d be remiss if I didn’t mention Endeavor’s work on building ecosystems, and their own research on multipliers, many of which are represented in this research.

Those who create mafias do so in fits and starts. Like all things in startups, power laws matter. VC fund returns are dominated by outlier VC funds, driven by underlying outlier startups. And similarly, certain companies are outliers in creating startup mafias. Not all companies are created equal and choose carefully.

What also surprised me was the exclusion of certain companies from the list. For example, giants like Shopify or UiPath, giants from Canada or Romania, were not high on the list.

Why this is important

This research underscores the importance for investors and entrepreneurs to actively build relationships with key talent in these startup factories — early. Many of today’s best founders have made their mark at other successful fintech startups.

Fintech Families alumni have not only been successful in raising capital, they also appear to be quite resilient. Despite the economic headwinds of recent years, 2023 saw the highest number of new fintech companies founded by alumni of these companies.

For aspiring founders, the message is even clearer: joining a leading technology company can provide invaluable experience, networking, and inspiration for your future ventures. First, they offer domain expertise. Research suggests that the most successful founders are older, more experienced, and solve problems they understand deeply (with exceptions, of course).

What excites me about the research is that Fintech Families aren’t just creating successful companies; they’re creating ecosystems of innovation that will shape the future of finance. And we’re still in the early stages: many of the companies studied are relatively young, and the median time to IPO for startups is 7-10 years. This means that the real wave of innovation from these alumni networks is still ahead of us.

Go ahead.