FinTech Venture Funding Continues to Rise

It seems venture capital firms are still taking a shine to FinTech companies, funding them at record levels. According to a CB Insights, VCs invested $5.4 billion over 323 different FinTechs worldwide in the first quarter of the year. Moreover a dozen companies saw investments of over $100 million during the quarter, marking a mega-round record.

While the study looked at FinTech operations globally, it was the United States that saw the biggest increase in investments last quarter, reaching $2.17 billion in Q1. At the same time, funding from big banks like Goldman Sachs and JPMorgan Chase has decreased from top levels seen circa 2016. This decline has occurred over the past five quarters, although these players do still continue to invest in financial technologies.

In addition to continued growth in FinTech funding, there are also now more unicorns emerging as well. The CB Insights study found there are 26 FinTech unicorns worldwide, worth a combined value of $77.6 billion. Two of these unicorns were actually “birthed” in the first quarter of 2018 thanks to VC deals. Once again, the U.S. leads the way in this category, as it is home to the greatest number of unicorns. Some of these companies include Affirm, Coinbase, Credit Karma, Robinhood, and Stripe.

Another interesting finding in the CB report is that early-stage investments in FinTechs fell to a new low this quarter. However, at 55%, these types of investments sill make up the majority, followed by late-stage investments at 21%, “other” stage investments at 15%, and mid-stage investments at 10%. By comparison, early-stage funding was at 62% one year ago.

With $5.4 billion invested during the first quarter of 2018, the year is now on pace to top other recent years. In 2017 VCs invested a total of $16.5 billion across 1,165 FinTech deals globally while 1,049 deal resulted in $13.8 billion of investments the year prior. As far as single quarters, Q1 2018 was slightly behind Q3 2015 and Q2 2017 in terms of investment dollars, but the 323 deals made marked a new record.

Finally CB notes that there seems to still be a market for alternative lenders, even as some public FinTechs like Lending Club and OnDeck continue to struggle on Wall Street. In particular they point to Upgrade — started by former Lending Club CEO Renaud Laplanche — which raised a $60 million in Series A from investors such as Union Square Ventures, VY Capital, CreditEase, and Ribbit Capital one year ago. That company says it expects to originate $2 billion in loans this year and is apparently valued at $180 million.

Overall the latest CB Insights Global FinTech Report is filled with good news for the industry. On top of the record number of deals, increasing mega-deals, and a number of unicorns coming to life, it’s also encouraging to see how many American companies are making an impact in the space. So while certain FinTech firms may not have made a major impact on the stock market just yet, these latest numbers show that VCs and other investors are far from giving up on new financial technologies.

Fintech will continue to rise and be popular because it is a more effiecient way to manage our finances but security must be a primary concern.

Comments are closed.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Bilt Rewards Launches Travel Portal with Benefits for Cardholders

Last year, the startup Bilt made a splash when it announced a new service that would reward users for paying their rent. That premise was then expanded upon with the launch of the Bilt Mastercard, which is issued by Wells Fargo. Now, continuing to capitalize on both the hype of their product and the demand for travel, Bilt has debuted another new offering for customers. This week, Bilt Rewards announced...

Cash App Introduces Round-Up Investing Feature for Debit Card

Debit card customers looking to grow their investments gained a new, automated option today as Block Inc. (formerly Square Inc.) officially announced a new feature for its popular Cash App. Now, customers with the Cash App Cash Card can opt into Round Ups as a means of growing their investments. When this feature is toggled on, Cash App will round up debit card purchases to the nearest dollar and invest...

Marqeta Expands Credit Program with New APIs and More

A FinTech that specializes in creating credit card experiences is rolling out some new features. This week, Marqeta announced what it calls a "significant expansion" of its credit platform. This includes more than 40 new credit APIs that will further help clients craft and launch their own credit card products. Additionally, the company notes an updated intuitive dashboard. Using this platform, businesses can create unique card options that can not...