FinTech Investments Topped $34 Billion Last Year
If it weren’t already clear, 2019 was a good year for FinTech. In addition to a profile boost that companies such as Robinhood and SoFi have enjoyed, it seems that numerous startups saw significant new investments. In fact, as a new report from CB Insights shows, FinTech startups raised nearly as many funds in 2019 as they did in 2016 and 2017 combined.
First the bad news: FinTech investments were down from a record-setting 2018. In all, the $34.5 billion total marked a 15% year over year drop. That said, if you overlook the absolutely massive $14 billion that Ant Financial received that year, then 2019 would be the new king. What’s more, quarters two through four were stronger than any quarter of 2018, save Q2 when Ant’s aforementioned ultra-mega-round occurred. The last quarter of 2019 was also the strongest, with $9.389 billion be raised by Fintechs.
However, one somewhat concerning trend for the year was the dip in early-stage investments. In Q4 2019, the number (253) of Seed, Angel, or Series A funding rounds dropped to their lowest point since the end of 2016. Simiarly the total dollar amounts raised in those rounds fell from $6.5 billion in 2018 to $5.3 billion last year. While Seed/Angel deals still accounted for one-third of investments in 2019, that’s still ten points lower than in 2015. At the same time, nearly half of last year’s funding came from just 83 late-stage mega-deals of $100 million or more.
Last year also saw a number of FinTechs grow horns as they attained unicorn status. In Q4 alone, Bright Health, Ebanx, Figure, Next Insurance, Rapyd, Ripple, Riskified, and Wefox Group all saw valuations rise to a billion dollars or more. Another 16 companies also became unicorns during the first three quarters of the year, setting a new record overall. According to CB Insights, there are now 67 FinTech unicorns globally, worth a combined total of $244.6 billion.
Interestingly, one area that saw impressive growth was insurance — or “Insurtech.” As the report notes, companies such as Hippo, Next, Wefox, and Bright Health all had nine-figure investment rounds in 2019. Additionally Lemonade became a unicorn last year with a valuation of $2 billion. As TechCrunch notes, as a whole, Insurtech companies raised $6.2 billion in 2019 compared to $3.2 billion the year prior.
Looking ahead, 2020 is already off to a great start. Not only did three startups become unicorns so far this year (Flywire, Highradius, and Pine Labs) but it looks as though mobile-only bank Varo Money will soon obtain its long- sought after bank charter and Intuit is acquiring Credit Karma for $7.1 billion. Can growing interesting in the sector help funding beat the near-record 2019 or even the Ant Financial-fueled 2018 record? It’s certainly possible.