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

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  • Garitta, Claudio
  • Grassi, Laura

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.

Suggested Citation

  • Garitta, Claudio & Grassi, Laura, 2025. "Predicting break-even in FinTech startups as a signal for success," Finance Research Letters, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:finlet:v:74:y:2025:i:c:s1544612324017641
    DOI: 10.1016/j.frl.2024.106735
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    Keywords

    xAI; Growth; PSD2; PSD3; Machine learning; Start-ups;
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