Global venture capital funding for financial technology (FinTech) is on course to pass $15 billion in the first quarter of 2021, according to a report from analyst firm CB Insights.
An interim report to the end of February finds that quarter to date (QTD) funding had already hit $13.4 billion with a month still left to run. The company will publish a full report on the quarter in April.
This means that FinTech investments are at their highest level since the end of Q2 2018, when Ant Group raised $14 billion.
Funding is currently on track to grow 39 percent sequentially, even after excluding stock-trading app Robinhood’s emergency convertible debt raise of $3.4 billion.
- Robinhood’s move followed the spike in trading in GameStop and other ‘meme’ stocks putting a strain on its finances in January. According to a report in the FT, Robinhood filed for a Nasdaq IPO with the SEC last week. Listing could take place within months.
Overall, the investment market is continuing to pick up after a jittery 2020, in which FinTech was one of the few hotspots compared with previous years.
Funding is likely to have been driven by recognition of homeworkers’ desire to manage their finances online or via their mobile devices.
However, seed/angel round investments have continued to decline as a proportion of overall FinTech funding – to 31 percent of the QTD, down from 45 percent in all quarters of 2018.
This suggests that the market is continuing to consolidate around more established players. Q1 has set another record for mega-rounds (those totalling more than $100 million) in one quarter: 33, says the report.
The investment boom is largely distributed across North America, Europe, and Asia, with North America hitting a record high for quarterly funding, driven by Robinhood.
However, mega-rounds also took place in Nigeria, Argentina, Israel, Australia, Mexico, and Uruguay.
FinTech companies such as LendInvest, Checkout.com, Nubank, and MX Technologies “continue to leverage the vast pools of private capital available to them”, says the report.
As long as more mature FinTech players spurn flotation, mega-round totals could continue hitting new highs, it adds. The preferred exit for some start-ups may be acquisition by a larger financial services player or technology platform.