Many-Winner Markets

Nikhil Trivedi (Footwork) asks whether more markets are now many-winner rather than winner-take-most, using neobanks as the case.

Why it was kept

Kyle’s excerpts follow the argument: from an early-stage investor’s vantage point a $1B+ company is a winner, neobanks such as Chime, Monzo, N26, Nubank and Revolut show a crowded market producing several, and the closing question is whether a decade of abundant capital has made many-winner outcomes more common.

As Kyle captured it

• Read Many-Winner Markets by Nikhil Trivedi at Footwork
  • Is this market winner-take-most, or winner-take-all?
  • It’s true that, in several markets, factors such as network effects and economics of scale lead to one giant winner, or a handful of large winners. After all, we live in an era of a few enormous technology companies that dominate their categories. Apple, Microsoft, Amazon and Alphabet are each over a trillion dollars in market cap, and Facebook is not far behind.
  • I’m defining “winners” here from the vantage point of an early-stage investor; a $1+ billion company can be considered a winner if you’re investing at a <$50 million valuation
  • They enable consumers to set up a bank account and get a debit card, all with a few clicks on a phone, without ever visiting an in-person branch or signing any physical paperwork.
  • Chime, Monzo, N26, Nubank, and Revolut
  • Yesterday, three neobanks in the U.S. announced >$100 million rounds of funding, at least two of which were at >$2 billion valuations: Current, Greenlight, and Step.
  • Has the capital markets environment of the past decade, with more and more capital at every stage of company development, enabled more markets to be many-winner instead of winner-take-most?