Why San Francisco is the Fintech Capital of America

Spend a week in the San Francisco Bay Area and you won’t even come close to being able to visit all the important fintech companies located there. I know because I have tried. Nowhere else in the country is there such a concentration of companies trying to bring change to finance.

One-Third of All Fintech Unicorns Are Based in San Francisco

Earlier this year Business Insider published a list of the 27 fintech unicorns (those companies worth more than $1 billion) globally. Now, this was three months ago and did not include any public companies but it was an interesting window into where fintech is really getting traction. What was interesting is that nine of the 27 companies on the list were based in San Francisco. No other city globally came close to that number.

Here are the nine fintech companies based in San Francisco that are on the Business Insider list: Stripe, SoFi, Credit Karma, Zenefits, Coinbase, Affirm, Robinhood, Clover, and Gusto. Tradeshift raised money at a $1.1 billion valuation after the list was published so it should also be on there. The list did not include public fintech companies such as LendingClub and Square (both are worth well over $1 billion), which is based in San Francisco. And then there are companies like Prosper that were a unicorn at one stage.

Crunchbase actually maintains a list of all the fintech companies based in the San Francisco Bay Area, there are an astounding 488 of them. There are some great companies on this list that are not unicorns yet but could very likely be one day: Upgrade, LendUp, BlueVine, Wealthfront, Blend, Upstart, Fundbox, Chime, Plaid, Figure, and Juvo just to name a few.

The Only Real Challenger: New York City

The only city that could possibly challenge San Francisco for the title of “Fintech Capital of America” is New York City. In the Business Insider article mentioned above New York only has two companies on that list: Oscar and UiPath.

Crunchbase maintains a Greater New York Area Fintech Companies list to give us another data point. Interestingly, there are almost as many companies on this list as the Bay Area list: 478. Some of the names included on the New York list are Stash, Behalf, Bread, MoneyLion, Cadre, Even Financial, The Credit Junction, OnDeck, and Braavo.

A better comparison than absolute numbers of fintech companies is the total amount raised. Here Crunchbase comes in helpful again. We see that in San Francisco fintech companies have raised a total of $17.2 billion versus $7.9 billion for fintech companies in New York.

San Francisco’s proximity to Silicon Valley

Obviously, San Francisco entrepreneurs benefit greatly because of their close location next to Silicon Valley, the undisputed center of venture capital in the world. When it comes to total VC investment the San Francisco Bay Area dominates any other area of the US. According to CityLab the Bay Area, which includes San Francisco and Silicon Valley accounted for nearly 45% of total venture capital investment in the United States.

Both San Francisco and New York have access to highly trained workforces but here again, I think San Francisco has a slight edge. With leading technology companies like Apple, Google, Facebook, and Netflix all based in the Bay Area this brings in a huge pool of engineering talent.

While other cities like Atlanta, Chicago and Los Angeles are also home to many fintech companies no other cities can seriously lay claim to the title of fintech capital of America. San Francisco has been the center for technology for many decades, New York has been the center of finance for many decades. But when it comes to fintech I think it is clear: San Francisco is the fintech capital of America today.

That is one of the reasons why LendIt Fintech USA will be back in San Francisco again in 2019. Registration is now open.

  • Peter Renton

    Peter Renton is the chairman and co-founder of Fintech Nexus, the world’s largest digital media company focused on fintech. Peter has been writing about fintech since 2010 and he is the author and creator of the Fintech One-on-One Podcast, the first and longest-running fintech interview series.