Issue link: http://endeavor.uberflip.com/i/1202586
Among the estimated 113 fintech companies in the sector today, only 5 percent employ more than 50 people, and none of them were founded in the past 5 years. 9 S C A L E A N D DY N A M I S M : A R E F I N T E C H C O M PA N I E S S C A L I N G I N M I L A N ? While the number of new startups has exploded in Milan for the past decade, entrepreneurs are facing significant constraints in scaling their companies over a certain level. Among the estimated 113 fintech companies in the sector today, only 5 percent employ more than 50 people, and none of them were founded in the past 5 years. The largest fintech companies like Moneyfarm and Satispay employ slightly more than 100 employees. Successful fintech companies founded around the same time like N26 in Germany, Revolut in the UK, or Nubank in Brazil employ an order of magnitude more. Further, there were only six acquisitions in the sector to date. Fintech companies are starting up, but they are not scaling. Milan's difficulty to produce fintech companies at scale poses significant challenges for the sector's future growth, because companies that scale drive most of the economic growth in a country. Companies with 50 or more employees across all sectors represent less than 1 percent of Italian businesses in the private sector (all sectors), but they account for a third of the job creation and over half of the revenue generation in the private sector. 14 Other studies of tech entrepreneurship conducted by Endeavor Insight show similar trends in New York, Bangalore and Mexico City. Research from across the world has demonstrated that companies at scale also tend to pay higher than average wages, and they are more resilient in times of crisis. 15 What makes it so hard to scale a fintech company in Milan today? Decision makers who want to help the fintech sector grow need to identify and address these constraints. Fintech entrepreneurs who are working to scale their companies today are the best source of this information, and when asked about what were their greatest challenges in scaling a company, they pointed out three issue areas.