FinTech Funding Reaches Record High in Q2 2021
FinTech is on fire! As the latest “State of FinTech” release from CBInsights notes, last quarter marked a boom for financial technology startup funding. In fact, Q2 set a new record for investment deals in the sector.
According to the report, FinTech companies raised a total of $30.8 billion from venture capital firms last quarter. That was up an impressive 30% from the first quarter of the year — which itself was a record. This record-breaking sum was spread across 657 individual deals cataloged. Of those, 88 were so-called “mega-rounds” of $100 million or more. In total, mega-rounds made up 70% of total funding for the quarter. As a result, the average deal size grew from $37 million in Q1 to $47 million in Q2.
One of the larger funding rounds to close in Q2 2021 came from Plaid. After Visa’s acquisition of the firm fell through, the company raised an astounding $425 million Series D in April. Incidentally, last month, Visa announced plans to purchase UK-based FinTech Tink for approximately $2.15 billion.
The quarter’s rounds also showed some emerging themes, including the growth in teen-centric challenger banks. In Q2 alone, Greenlight raised $260 million, Current closed a $220 million round, and Step saw a $100 million Series C. Speaking of Current, a recent eMarketer report found that the neobank is now the second-largest in the United States with an estimated four million users. This puts them behind only Chime in terms of FinTech banking platforms.
As for the VCs that are most invested in the sector, Sequoia retained its crown as the most active FinTech investor over the past year. They were followed by both Accel and Ribbit Capital in a tie. Finally, a16z and Index Ventures filled out the top five.
CBInsight’s Q2 2021 report also provided an update on FinTech unicorns. Globally, there were a total of 131 FinTech unicorns during the quarter, with a combined valuation of $516 billion. Of course, this figure was impacted or will be impacted by some high-profile IPOs. For example, SoFi went public via SPAC last month. Meanwhile, the controversial stock trading app Robinhood is gearing up for its IPO, which is currently expected to take place on July 29th.
While it’s fascinating to see the final figures in print, it wasn’t hard to see that FinTech was having a massive year. Between some truly impressive mega-rounds and noteworthy IPOs, there’s also been a flood of early-round investments among some promising startups. As a result, the question isn’t if the sector can set another new record but when that next milestone will be reached.