4 takeaways from fintech VC in Q3 2020

By | November 3, 2020

Fintech has been a key startup story in current quarters, with main gamers within the style elevating titanic rounds at eye-popping valuations. Contemplate corporations like Robinhood, and its epic capital run this year on the again of huge revenue growth, or Chime, which additionally raised huge sums whereas using a tailwind offered by the savings and investing boom.


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As you may think about, all these mega-deals have added up. In keeping with data collated by CB Insights on the fintech space within the third quarter, 60% of all capital raised by monetary expertise startups got here from simply 25 rounds price $100 million or extra. Including to the development of venture getting bigger — and later as unicorns age with out graduating to the general public markets — the identical report famous that fintech funding from $100 million rounds grew 24% in comparison with Q2, whereas funding within the house from smaller offers fell 16% over the identical timeframe.

General fintech deal quantity dipped 24% in comparison with Q3 2019, totaling 451 international offers. However {dollars} invested into fintech startups edged up as soon as once more to $10.631 billion, the most important end result up to now in 2020 and the second-best single-quarter tally since mid-2018.

Oddly, it was the underside, in addition to the highest of the market that did finest. As we’ve seen, late-stage cash flowed. However, notably, the variety of the smaller enterprise rounds, these marked seed or angel, grew by 20% in comparison with Q2 2020.

Maybe the following crop of unicorns is being based?

Contained in the CB Insights knowledge are a couple of developments price digging into, together with what’s happening with enterprise funding into payments-focused startups, how the IPO market could also be impacting insurtech funding, and the way each wealth administration startups like Robinhood and banking startups like Chime are faring as cohorts.

The info is fascinating, so let’s get into the state of fintech investing at this time.

Massive developments, greater {dollars}

We’re targeted on 4 mega-trends at this time, however I wished to begin level out that African fintech startups noticed what seems to be their all-time report in deal depend at 14. That was up from 11 in Q2 2020, and 9 in Q1. I’m working to pay extra consideration to the African tech scene, and people numbers stood out.

As fintech deal depend falls within the largest VC markets — North America, Europe, Asia — it’s rising in Africa and Latin America, one thing to control.

Through CB Insights, shared with permission.

Now, into our 4 mega-trends.

Funds

Funds startups like Stripe and Finix get their share of headlines, however they make up solely a fraction of the full quantity of enterprise capital funding that their sector absorbs.

Per CB Insights, enterprise funding into funds startups ticked greater in Q3 2020, rising to $3.959 billion from $2.379 billion in Q2 2020, and $2.927 billion in Q3 2019.

Other than an anomalous remaining quarter in 2019, funding into payments-focused startups has been on a gradual incline for a while. Why? PayPal earnings provide a partial rationalization. As we reported yesterday after the patron funds big reported its Q3 efficiency:

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