In an effort to boost growth, Santander has acquired, partnered with, and invested in fintech companies that enable better customer experiences, make it easier to access credit, and help businesses manage their finances. It has also launched new tech-forward payments and banking products (such as PagoNxt) and stepped into digital asset trading.

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According to SVB, its clients account for 71% of all fintech IPOs since 2020. It’s clearly plugged into the fintech ecosystem.

The fallout from recent events may leave a hole in fintech that won’t easily be filled. While moving to a new bank for your deposits might be simple, searching for and setting up a payment rails and processing partner is a more difficult process.

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Within tech, SVB focused on 6 key areas, as shown in the below graphic. Its focus areas included:

• Edtech
• Industrial technology
• Enterprise software
• Digital infrastructure & tech services
• Consumer software, internet, and info services
• Fintech

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However, some top investors like Andreessen Horowitz (a16z) remained active in the space across various deal stages, valuations, geographies, and sub-industries. 

Fintech is central to a16z’s investment strategy. In recent years, the firm has not only shored up its presence in more familiar sectors like banking, but also reached deeper into newer territory like blockchain. 

Of the 206 deals a16z participated in last year, almost a quarter went to fintech companies — more than any other industry. Sixty percent of these fintech investments closed in H1’22, and the remaining 40% closed in H2’22.

Using CB Insights data, we mapped how a16z spread these fintech investments across categories like payments, blockchain, digital lending, and more. 

Below, we dig into a16z’s top 3 fintech targets in 2022, including key deals in each category.

Payments 

More than a quarter (28%) of a16z’s fintech investments in 2022 went to the payments category. Notable investments include:

• SpotOn ($300M Series F): SpotOn offers a cloud-based platform that provides payment solutions for restaurants and small retailers. 
• Jeeves ($180M Series C): Jeeves offers corporate cards and other expense management tools for businesses, with a focus on credit and payments rails across countries and currencies.
• Tally Technologies ($80M Series C): Tally’s app helps consumers pay off credit card debt more quickly by automating payments.

Blockchain

a16z has actively invested in companies developing blockchain platforms for years. In 2022, 22% of its fintech deal volume went to blockchain companies — although most of these deals closed between January and June, before the year-end turmoil that rocked the cryptocurrency markets. Notable investments include: 

• Matter Labs ($200M Series C): Matter Labs is an Ethereum development company building a rollup layer 2 network designed to lower fees and speed up transactions. 
• Lightspark ($175M Series A): Lightspark, launched in May 2022, is building a Bitcoin payments tool.
• NEAR Protocol ($150M Series B): NEAR Protocol is developing a platform for blockchain-based decentralized applications, with a heavy focus on Web3.
  

Digital lending

a16z’s third-most popular fintech category in 2022 was digital lending, accounting for 12% of the firm’s fintech deal flow. Notable investments include: 

• Point Digital Finance ($115M Series C): Point provides a lending marketplace that allows homeowners to borrow against a percentage of the future value of their property.
• Valon ($60M Series B): Valon offers residential mortgage loan servicing technology through a cloud-native platform. 
• Vesta ($30M Series A): Vesta provides a platform for mortgage origination and underwriting that is designed to streamline processes, reduce risk, and help lenders improve their book of business. 

The post Analyzing a16z’s fintech investment strategy: Where did the VC place its biggest bets in 2022? appeared first on CB Insights Research.

As Affirm looks to enhance its core BNPL offering — and drive profitability and new growth — the company has forged hundreds of partnerships, invested in a handful of companies, and made 2 acquisitions over the last 3 years.

For example, the BNPL leader has deepened its partnerships with e-commerce platforms like Shopify and Amazon, reducing its reliance on Peloton — historically one of Affirm’s most important partners. Meanwhile, the company has grown its presence in new retail verticals and industries like travel. And its made strategic relationships, including the December 2020 acquisition of Canada-based BNPL provider PayBright, to expand beyond the US into Canada.

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The continent’s antiquated banking system (serving mainly the affluent) and largely underbanked population have created the perfect breeding ground for fintech growth, speeding up both development and adoption of new technologies.

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Canada-based fintech startups — several of which have made it onto CB Insights’ annual Fintech 250 list of promising companies over the years — are building products across a broad range of applications, including payments, lending, banking, wealth management, blockchain, and more.

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But the firm is now looking to expand far beyond its traditional business lines, such as investment banking and asset management.

For example, it recently launched a digital consumer bank called Marcus and partnered with Apple to launch a credit card. Goldman is also building an embedded finance offering to allow its financial services — such as digital lending, escrow services, and payments processing — to be integrated with third-party platforms like e-commerce sites via APIs.

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The tech giants — such as Meta, Apple, Google, and Amazon — are well-positioned to do well in fintech, one key reason being that they all have far-reaching platforms with gigantic user bases. This creates opportunities to seamlessly integrate financial services into existing products through partnerships or in-house efforts, scale them up with ease to reach users already bought into a company’s ecosystem, and then benefit from network effects as they gather mountains of data on how users actually respond to these services.

With the big tech companies looking for new revenue lines, expect fintech to remain a key focus for them in the years to come.

Download the report to find out:

• The major tailwinds fueling big tech activity in fintech
• The competitive advantages of different tech giants in fintech
• Where big tech is competing in fintech

REPORT HIGHLIGHTS:

• Big tech investment activity in fintech is declining. Big tech companies have participated in 10 fintech deals worth a total of $1.2B in 2022 so far — their slowest pace of deal activity in the space for years.
• Big tech competition intensifies across digital wallets and e-commerce. Apple and Google are now in fierce competition for the digital wallet category. Both giants are eyeing a slice of the digital ID market, but Apple has a potential edge due to its partnership with the TSA. Meanwhile, Google and Meta are emerging as new e-commerce hubs, competing for Amazon’s market share.
• Big tech is experimenting with a wide range of fintech offerings, but some are still finding their footing. Google canceled its banking initiative Plex before the rollout, leaving long waitlists behind. Similarly, Meta ended its crypto initiative Diem after 3 years. However, the companies are far from abandoning fintech — Google, for example, has put its focus back on digital enablement.

The post The Big Tech in Fintech Report: How Meta, Apple, Google, & Amazon are battling for the future of financial services appeared first on CB Insights Research.

Mega-rounds also accounted for a smaller percentage of total funding (34%) compared to the average of 66% in 2021.

Below, check out a handful of highlights from our 150-page, data-driven State of Fintech Q3’22 Report. For deeper insights, all the record figures, and a ton of private market data, download the full report.

Other Q3’22 highlights across fintech include:

• Mega-round funding came in at $4.4B, the lowest level seen since 2018.
• Fintech unicorn births fell below double digits for the first time since 2020, with just 6 new unicorns in Q3’22.
• M&A deals dropped 14% QoQ to 155 deals, an 8-quarter low. The number of SPACs surpassed IPOs for the first time ever.
• Europe (32%) surpassed the US (24%) in late-stage deal share for the first time since Q4’18.
• US fintech funding fell 43% QoQ to $5.1B, reaching its lowest point since Q1’20.
• Coinbase Ventures was the most active fintech investor in Q3’22, backing a total of 16 fintechs and surpassing Tiger Global Management, which topped the list during the previous 2 quarters.

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Some of this year’s winners are building safer and more efficient ways to send and receive payments. Others are striving to make banking, loans, mobile wallets, and investing products available to historically underserved populations all over the world. 

Using the CB Insights platform, our research team selected these 250 winners from a pool of over 12,500 eligible private companies, including applicants and nominees. They were chosen based on factors including proprietary Mosaic scores, funding, market potential, business relationships, investor profile, news sentiment analysis, competitive landscape, team strength, and tech novelty. The research team also reviewed over 2,000 Analyst Briefings submitted by applicants. 

Clients can access the entire Fintech 250 list and interactive Expert Collection here. (If you don’t have a CB Insights login, create one here.)

Companies are categorized by their primary focus area and client base. Categories in the market map are not mutually exclusive. Please click to enlarge.

Want to be considered for future rankings? Fill out this initial application form (it’ll take no more than a few minutes). If selected, you’ll be asked to complete our Analyst Briefing Survey so that our analysts can better understand your products, customers, and market traction.

FINTECH 250 COHORT HIGHLIGHTS

Below are a few highlights from the Fintech 250 Class of 2022.

New vs. repeat winners: Nearly two-thirds (64%) of this year’s cohort are repeat winners: 144 were on last year’s list and 16 have made their way back onto the list after winning in a prior year. That leaves only 90 new winners (36% of the list), the fewest ever since we started the Fintech 250. 

Why is the new winner cohort so small? In the past, many winners would exit via IPO or M&A and lose eligibility for the list. Today, fintech leaders are staying private longer, especially amid this year’s market turmoil. This has allowed them to retain their eligibility through multiple list rounds. Additionally, factors such as rising inflation, interest rate hikes, and struggling public tech stocks have made it more difficult for new entrants to make a splash in the already maturing fintech market. 

Some of the biggest names in the industry, like Stripe and Klarna, have certainly faced their fair share of obstacles, including layoffs and valuation cuts. But when analyzing the data — including revenue, number of customers and customer growth, partnerships, and equity funding — most of these better-established fintech leaders remain on top.

Global reach: Globalization is a key theme for this year’s Fintech 250. The winners represent 33 different countries (by headquarters location) across the globe — 7 more than last year. Just over half (53%) of the selected companies are headquartered in the US, which is the fewest we’ve seen in the Fintech 250 since 2017. The UK came in second with 31 winners (12%), followed by India with 14 (6%), Brazil with 9 (4%), and Germany with 7 (3%).

Stemming from the broader theme of globalization comes localization — the practice of serving local markets and regions. This is a strong focus for winners in emerging markets like India, South America (11 winners, 4%), and Africa (6 winners, 2%).

For example, 3 of this year’s first-time winners are building payment networks in Africa: MFS Africa, TeamApt, and Paga.

B2B vs. B2C: About two-thirds (64%) of this year’s Fintech 250 are B2B, and 36% are B2C. The B2B-B2C split represents a broader shift in market sentiment away from consumer-facing fintechs. This has been driven in part by reports released this year citing the lack of neobank profitability as well as the visible struggle of public B2C fintech stocks like Robinhood, Coinbase, Affirm, and NuBank.

The largest B2B fintech winners by valuation are Stripe ($74B internal valuation), Checkout.com ($40B), Plaid ($13.5B), and Brex ($12.3B).

Most-represented categories: The fintech categories comprising the most winners are payments processing & networks with 33 (13%), insurance with 25 (10%), cryptocurrency with 24 (10%), core banking & infrastructure with 19 (8%), and retail investing & wealth management with 17 (7%).

This marks payments processing & networks’ second straight year as the top category by number of winners. This category includes B2B providers of e-commerce and point-of-sale (POS) payments processing, APIs, payouts, cross-border payments, and more. It also tied with cryptocurrency for the most new winners at 11. Notable new Fintech 250 champions in the payments processing & networks space include card reader and POS system provider SumUp, gaming payments platform Coda Payments, and Brazil-based CloudWalk (the developer of POS solution InfinitePay).  

All but one of this year’s insurance winners were also featured in our inaugural Insurtech 50, published in June 2022. The category includes companies selling insurance products and services directly to customers (i.e., individuals or businesses buying an insurance policy), like Digit Insurance in India and SMB-focused Next Insurance. It also includes companies like Cambridge Mobile Telematics and Shift, which sell technology to reinsurers and insurance brokers.

Despite the crypto market downturn this year, startups in the space still account for a significant share of this year’s Fintech 250 list. Data on funding, top investor support, revenue, and business relationships still point to the long-term momentum of these companies. Notable players include crypto exchange Binance as well as Web3 infrastructure providers ConsenSys and Fireblocks.

Overall funding & valuation trends: The Fintech 250 cohort has raised over $115B in equity funding across over 1,100 deals since the start of 2017 (as of 9/20/2022). In 2021 alone, winners raised over $51B across 337 equity deals. That’s an average of more than one funding round per company in a single year.

The top 3 winners by total equity funding raised since 2017 are Ant Group (who’s had to delay an IPO due to Chinese government regulations), Klarna, and Chime.

This year’s list includes 159 unicorns with a $1B+ valuation — almost two-thirds (64%) of the total list. While that stat definitely jumps off the page, it’s a little less shocking when you consider that there were a total of 297 fintech unicorns in the world at the end of Q2’22.

Top investors: Tiger Global is the top investor in this year’s Fintech 250 by a significant margin, having backed equity deals to 45 of the winners, including Stripe, Checkout.com, and Revolut, since 2017. Accel is second with 29 companies in its portfolio, followed by Ribbit Capital with 27.

Innovation at the earlier stages: Thirty-two (13%) of our winners are seed, Series A, or Series B startups.

To highlight a few, MoonPay provides fiat-to-crypto on- and off-ramps for crypto and NFT businesses, enabling them to accept traditional payment methods. International insurtech bolttech is building a global insurance exchange that connects insurers, distribution partners, and customers, to change the way insurance is bought and sold. Finally, StockGro is an India-based social investing app that allows users to invest virtual money to learn about stocks, play games, and win rewards.

THE FINTECH 250 CLASS OF 2021: WHERE ARE THEY NOW?

Since the start of October 2021, the 2021 Fintech 250 winners have posted a number of accomplishments, including:

• Nearly $20B in equity funding raised across 150+ deals (as of 09/20/2022)
• 68 mega-rounds (deals worth $100M+), including a $1B Series D to payments platform Checkout.com
• 5 exits, including 3 acquisitions and 2 IPOs (AvidXchange and Nubank)
• 20 new entrants to the $1B+ unicorn club, including Alchemy, Cross River Bank, and Qonto

If you want to learn more about the Fintech 250 Class of 2021, check out the full list of previous winners.

The post The Fintech 250: The most promising fintech companies of 2022 appeared first on CB Insights Research.

Although overall fintech investment fell by 33% in Q2’22, funding to BNPL companies has already reached $2.6B in 2022 — on pace to comfortably surpass 2021’s record-high of $4.3B.

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Since its founding in 2013, the challenger bank has grown its user base rapidly — reaching 60M customers as of May 2022, up 61% year-over-year. It notched $877M in revenue in Q1’22, with a gross profit margin of 34%.

In 2011, only 56% of Brazilian adults had bank accounts. To grow that number and take on the country’s financial incumbents, Nubank has offered digital banking products — including a mobile-based credit card with quick approval and no-fee bank accounts — to young consumers, as well as Brazil’s vast under- and unbanked population.

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In line with this trend, $100M+ mega-rounds also accounted for a smaller percentage of total deals (4%) and funding (47%) than they did at any quarterly point last year.

Below, check out a handful of highlights from our 197-page, data-driven State of Fintech Q2’22 Report. For deeper insights, all the record figures, and a ton of private market data, download the full report.

Here are some of the fintech highlights from Q2’22:

• Mega-round funding came in at $9.7B, a 45% drop QoQ.
• Just 20 fintech unicorns were born, marking the first time this figure has fallen below 30 since Q4’20. New entrants to the unicorn club include KuCoin ($10B), Coda Payments ($2.5B), and Newfront Insurance ($2.2B).
• M&A deals took a 30% QoQ hit, dropping to 181 deals from 257 in Q1’22. In contrast, wealth tech saw a 24% jump in M&A deals QoQ.
• While Europe fintech funding sank across most fintech sectors, wealth tech startups in the region saw funding increase. European banking startups, on the other hand, saw funding drop by more than 50% QoQ.
• Foreshadowed by the previous 2 points, wealth tech was the only sector that saw deals increase QoQ. Startups in the space secured 188 deals, a 36% increase QoQ.
• Tiger Global Management lost its top investor crown to Global Founders Capital in Q2’22, investing in 22 fintechs vs. the latter’s 24. On the whole, the top 10 investors funded 27% fewer companies in comparison to the previous quarter.

Download our Q2’22 State of Fintech Report to dive into all these trends and more.

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The post CRED, an Indian fintech company providing consumer credit, reaches $6.4B valuation. CRED competitors are Slice, OneCard, and CreditVidya. appeared first on CB Insights Research.

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Many of these relationships extend beyond PayPal’s core offering of payments processing. Since 2020, the company’s partnership, investment, and acquisition activity points to 2 long-term goals: entry into global markets and expanding into other financial services industries along with crypto and blockchain. 

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In our State of Digital Lending Q1’22 Report, we dig into global investment trends to spotlight takeaways including:

• The region that saw record deal activity
• A recovery in global M&A exits, up 63% QoQ
• The record unicorn count, unicorn birth trends, and new digital lending unicorns of Q1’22
• The top investor in digital lending startups
• A massive rebound in funding to this region, up 56% QoQ
• And much more

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