Predicting break-even in FinTech startups as a signal for success

Claudio Garitta and Laura Grassi

Finance Research Letters, 2025, vol. 74, issue C

Abstract: FinTech startups drive innovation and competition in the financial services industry. An early milestone for these startups is to achieve break-even, which sends out a positive signal to the market – and to potential partners and financial institutions – by demonstrating viability and lower perceived risks. Our analysis of proprietary survey data using logit and random forest, interpreted through SHAP values, indicates that external funding significantly decreases the likelihood of a startup reaching break-even. This negative impact can be traced to strategic misalignment with investor expectations, delays in the implementing of stringent financial management practices, and an emphatic focus on rapid growth.

Keywords: xAI; Growth; PSD2; PSD3; Machine learning; Start-ups (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:74:y:2025:i:c:s1544612324017641

DOI: 10.1016/j.frl.2024.106735

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