April 1, 2016
January and February 2016 were quite fruitful for FinTech as in the first month of the year, the industry attracted an extra $7 billion and the second month brought almost $1.5 billion. As the month of March comes to an end, let’s look at how it has treated FinTech around the world so far.
According to Financial Technology Partners (an investment bank focused on FinTech), March 2016 counted 109 financing deals in FinTech with a total of $887.7 million being poured into FinTech companies across segments. March has indicated a downshift in FinTech funding overall as it counts a lower number of financing deals than both the previous months.
Let’s take a closer look at the structure of almost a billion raised by 89 companies (as 20 deals have an unreported amount of the funds raised). The funding would have most likely reached a billion if all the companies would have reported their financing amount.
Investments by segment
The banking/lending and securities/cap markets/wealth management segments are represented by the largest number of companies – 26% and 23%. The banking/lending segment has always been one of the most attractive with extremely successful and well-funded companies operating internationally. The following segments are considerably smaller: payments/loyalty/e-commerce represents 16% of the companies and financial management solutions represent 15%. If we were to consolidate the insurance and FinHCIT segments, as they are essentially of the same domain, they would constitute 16% of the companies. However, separately, insurance is responsible for only 6% of the deals.
Even though insurance companies are taking up the least space, there is a stable trend of the proportion of InsurTech companies being funded overall. In January and February, they represented 5% of the companies that raised funds. Regardless of the small representation, InsurTech remains one of the most interesting and promising segments attracting significant attention and witnessing a rise of disruptive solutions.
The distribution of funds is pretty much similar to the representation with the exception of the payments segment, which represents 16% of the companies but raised 10% of the total funds. Although, if all companies have would’ve reported the funds raised, there might have been a difference.
The banking/lending and securities/cap markets/wealth management segments have attracted 26% and 24% of the funds raised, respectively. Interestingly, if in January and February, insurance has raised 1% of funds, in March, InsurTech companies have attracted 4% of total financing. It is the poorest-funded segment in March, but the trend is positive.
Let’s look at the actual numbers:
A total of $230 million went into the pockets of banking/lending companies’. Securities/cap markets/wealth management are not very far with almost $220 million raised. The following segments have attracted much less funding: financial management solutions - $165.7 million, FinHCIT - $110 million, and payments - $85.6 million.
The most-funded companies
Some of the companies that raised funds have made more significant contributions to the total amount than others. Here are the companies that had the most successful funding rounds:
The last days of March have brought Betterment $100 million in financing (securities/cap markets/wealth management), taking the company to the top. Betterment’s fresh round of funding demonstrates the demand and interest among venture capitalists in digital wealth offerings. The company is planning to use the new $100-million fund to enhance its recently launched line of business and has added a number of features like an account aggregation tool that pulls all customer assets into one dashboard, a retirement guide, etc. Betterment’s software invests and rebalances accounts automatically using cash inflows & dividends and uses software & algorithms to track whether or not a customer is likely to reach a specific goal.
The second place is held by Gusto (formerly known as ZenPayroll, financial management solutions), which raised almost $67 million. Connecture (FinHCIT) is not so far with $52 million raised from Chrysalis Ventures and Francisco Partners.
Total of 175 investors have been reported to support 109 financing deals. Among the hottest ones are 500 Startups (has invested in PawnHero), Index Ventures (Property Partner, Justworks), Silicon Valley Bank (Property Partner), Citigroup (Selerity), Bain Capital Ventures (Justworks), Bessemer Venture Partners (Betterment), Formation 8 (Branch.co), QED Investors (Future Finance), Santander Innoventures (Elliptic), Accel Partners (GoCardless), Andreessen Horowitz (Branch.co), Goldman Sachs (Momo), Khosla Impact (Branch.co) and others.
More detailed information about all the mentioned companies and investors can be found here.