Investments in financial technology (FinTech) are growing in strength at the high end of the market, after a difficult year for the global economy.
That’s according to market analysis firm CBInsights, which found that venture capital mega-rounds (deals worth $100M+) accounted for 60 percent of all FinTech funding worldwide in Q3 2020 – the highest percentage share since Q2 2018.
Q3 2020 mega-round funding increased by 24 percent quarter on quarter to $6.4 billion. However, non-mega-round funding declined by 16 percent, suggesting that this space is fast consolidating, with investments being steered towards the handful of more established ventures whose gravity is bending the market towards them.
This impression was reinforced by another finding in CBInsights’ latest report: overall deal activity declined in FinTech for the fourth consecutive quarter. That said, angel/seed investment rounds increased by 20 percent sequentially, suggesting that early stage ventures are still attracting supporting capital.
Big-tech companies remain significant players in the space, with the so-called FAMGA group (Facebook, Apple, Microsoft, Google, and Amazon) active in patent approvals, partnerships, and investments – most notably with Apple’s $100 million acquisition of Canadian mobile payments company Mobeewave.
Meanwhile, mortgage companies and brokerages were an acquisition hotspot last quarter, with Black Knight’s $1.8 billion purchase of Optimal Blue for $1.8B, ICE’s acquisition of EllieMae for $11 billion, and United Wholesale Mortgage set to go public in a $16 billion special purpose acquisition company (SPAC) deal.