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Contents
9
Q2’20 Fintech In Review
Summary of Findings
Top 5 Trends To Watch
Deals & Dollars
Fintech Unicorns
77
22
Sector Trends
Payments
Banking
Alternative Lending
Wealth Management
Insurance
Capital Markets
SMB
Real Estate
Fintech Funding Appendix
Annual Funding
Funding By Deal Stage
Regional Trends
Most Active Fintech Investors Q1’20 – Q2’20
Largest Fintech Deals Q2’20
Methodology
7
PAYMENTS
BANKING
ALTERNATIVE
LENDING
WEALTH
MANAGEMENT
INSURANCE
CAPITAL
MARKETS
SMB
REAL ESTATE
Companies creating new solutions
for personal or commercial lending
Mortgage lending, transaction
digitization, and financing
platforms
Digital-first banks or companies
digitizing banking services for
credit and debit
Payments processing, card
developers, money transfer, and
tracking software
Personal finance tools, investment
and wealth management platforms,
and analytics tools
Companies selling or distributing insurance
digitally or providing data analytics and
software for (re)insurers
Sales and trading, analysis, and
infrastructure tools for financial
institutions
Companies focused on
providing solutions to small-
to-medium sized businesses
W H A T TH E S TA TE O F F I N TE C H
C O V ERS
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#AhaCBI
Fintech In
Review: Q2’20
9
Summary of findings
There are 66 VC-backed fintech unicorns worth a combined $248B.
Q2’20 saw just 1 new fintech unicorn birth (Upgrade).
Fintech companies continue to mature, with many ready for the scrutiny
of public markets. S-1 filings in Q2’20 included Lemonade, nCino, and
Rocket Companies. In addition, Fusion Acquisition, a fintech-focused blank
check company (SPAC), raised $305M. These are signs that the fintech
ecosystem is continuing to mature, especially as financial technology
becomes more deeply embedded across other sectors.
M&A activity is concentrated within payments/banking infrastructure and
wealthtech. Sofi’s acquisition of Galileo and Mastercard’s acquisition of
Finicity demonstrate the rush to own banking and payments infrastructure
software. Wealthtech had an especially active quarter with the acquisitions
of Personal Capital by Empower Retirement, Folio by Goldman Sachs, and
Advisor Engine by Franklin Templeton.
Note: This report focuses on equity rounds to VC-backed fintech companies. This report does not cover
companies funded solely by angels, private equity firms, or any debt, secondary, or line of credit
transactions. All data is sourced from CB Insights. Unicorns are private companies last valued at $1B+.
Fintech funding rebounds in Q2’20 but deal activity continues to fall.
Funding increased 17% quarter-over-quarter (QoQ) to $9.3B in Q2’20.
However, monthly deal activity hit a fresh low of 127 deals in April before
picking up the pace in June, which saw 141 deals. Quarterly deal activity
continued its steady decline that began pre-pandemic in Q4’19, potentially
indicating the presence of other headwinds in addition to Covid-19.
Fintech mega-rounds ($100M+) hit a new quarterly high of 28 as the
largest companies in the space raised additional funding. Some of these
mega-rounds may have been to support companies with high cash-burn
rates being put under pressure by the ongoing economic uncertainty. Mega-
rounds have become more common as successful startups are generally
staying private longer. However, the recent spate of IPOs and IPO filings
may indicate the start of a shift in this trend.
Asia was the only continent without a dollar funding rebound in Q2’20.
North America, Europe, South America, Africa, and Australia all saw an
increase in fintech funding QoQ while funding to Asia-based companies fell
37% to $1.6B. However, deal activity in all regions was either flat or down
QoQ.
10
Embedded fintech is happening around the world
and across applications
Funding data from Q2 shows that the trend towards embedded fintech applications, or the integration of
financial products by non-financial companies into their service offerings, is gaining traction around the
globe and across applications.
Q 2 ’ 2 0 F I N T E C H S P O T L I G H T # 1
Company
Embedded function
Country
Q2’20 Raise
B2B Payments
Australia
$160M Series D
Checkout.com
B2C Payments
England
$150M Series B
States Title
Mortgage closing
USA
$123M Series C
Banking services
Germany
$68M Series C
Accounting & tax for SMBs
Belgium
$30M Series B
Fintech startups enabling embedded financial services that raised in Q2
11
A new generation of bank service providers
continue to emerge, but incumbents are watching
The growth of open banking has continued to prompt investments into new bank technology providers,
though legacy companies such as FIS have also begun providing open banking services.
Q 2 ’ 2 0 F I N T E C H S P O T L I G H T # 2
1968
1971
1984
1976
(originally Systematics)
2010 2013 2014 2015
2018
2017
(Q2’20 Series A)
(Q2’20 Series A)
Year company founded
2007
The original bank fintech companies
The new wave of bank fintech companies
12
Covid-19’s boost to e-commerce growth is a
tailwind for fintech providers
Source: Bank of America, US Department of Commerce, ShawSpring Research; Note: 2020 data is through the end of April
Q 2 ’ 2 0 F I N T E C H S P O T L I G H T # 3
5.6% 6.4%
7.2% 8.0%
8.8% 9.7%
10.7% 11.8%
13.2% 14.4%
16.0%
27.0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
US e-commerce penetration (% of retail sales)
Apr-19
Apr-20
Stripe Atlas registered company
growth
220%
Stripe Atlas, a platform that
enables entrepreneurs to
form companies online, grew
new registrations by 220%
YoY.
“There has been a very sharp move from the offline
economy to the online economy”
John Collison, co-founder and president, Stripe
13
Intense retail wealth management competition
contributed to consolidation in Q2’20
Select Q2’20 wealth management acquisitions
Q 2 ’ 2 0 F I N T E C H S P O T L I G H T # 4
June 29, 2020
Empower, the second-largest US
retirement services provider, acquired
Personal Capital, bringing it an
additional 2.5M customers and digital
personal wealth management
capabilities. The deal is valued at
$1B.
May 6, 2020
Franklin Templeton acquired
AdvisorEngine, a software and
consulting company that works with
1,200 advisory firms with over $600B
in AUM. The acquisition will expand
Franklin Templeton’s offerings to its
financial advisors.
May 14, 2020
Goldman Sachs acquired Folio, an RIA
custodian platform with $11B in
assets under custody, for
approximately $500M. On May 20,
now shuttered Motif transferred its
accounts to Folio.
May 7, 2020
Charles Schwab acquired Motif’s tech
and IP. The deal will enable Schwab
to expand direct-indexing and
thematic investing solutions for retail
investors.
14
Fintech sees a flurry of IPO filings in Q2’20
*Publicly traded as of July 2020
Q 2 ’ 2 0 F I N T E C H S P O T L I G H T # 5
IPO Date: May 21, 2020
Ticker: SLQT
HQ: Overland Park, KS
Founded in 1985, SelectQuote is an online platform that
matches customers and select insurance carriers across
senior health, life, auto, and home insurance policies.
Company
Description
Lemonade (LMND)*
New York-based Lemonade is a digital renter
and homeowner insurance company
nCino (NCNO)*
Wilmington, NC-based nCino offers cloud-
based operating software to banks
SelectQuote (SLQT)*
Online insurance matching platform
Shift4Payments
(FOUR)*
Online POS provider
Fusion Acquisition
(FUSE)*
Fintech focused SPAC (blank check company)
Fintech S-1s filed in Q2’20
A 30-year old insurtech goes public
Multiple fintech companies filing to go public in Q2’20 could signal an impeding shift in attitudes
toward IPOs among other mature fintech companies.
15
Fintech deal activity continues quarterly decline
Quarterly global VC-backed fintech deals, Q1’17 – Q2’20
461
453
445
457
557
533
554
502
550
486
540
502
452
397
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2017
2018
2019
2020
Public markets
begin reacting
to Covid-19
16
Q2’20 fintech funding rebounds after 2 straight
quarters in decline
Quarterly global VC-backed fintech financing, Q1’17 – Q2’20 ($M)
$3,353$5,953$5,019$5,578$6,273$21,156$6,562$7,925$7,171$9,120$11,762$9,379$7,947$9,290Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2017
2018
2019
2020
$14,00017%
17
Public markets
begin reacting
to Covid-19
Covid-19 brought deals to a recent low in April
Deals to VC-backed fintech companies have picked up after falling to 127 in April, possibly signaling a
rebound.
# Of Deals
Total Funding ($M)
$3,483$1,434$2,253$2,809$3,286$3,025$4,902$2,913$3,946$2,507$3,221$3,651$2,136$2,161$3,650$2,846$3,006$3,438214
163 173
162
173
151
199
166 175
176 171
155 150 146
156
127 129
141
0
50
100
150
200
250
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Jan '19 Feb '19 Mar '19 Apr '19 May '19 Jun '19 Jul '19 Aug '19 Sep '19 Oct '19 Nov '19 Dec '19 Jan '20 Feb '20 Mar '20 Apr '20 May '20 Jun '20
18
Mega-rounds reach a new high in Q2’20
Global number of fintech mega-rounds ($100M+), Q1’15 – Q2’20
7
11
10
6
6
7
2
3
4
11
13
10
12
14
13
17
16
26
21
20
14
28
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2015
2016
2017
2018
2019
2020
19
66 FINTECH UNICORNS
$248 BILLION
G L O B A L L Y T H E R E A R E
V A L U E D , I N A G G R E G A T E , A T
20
$1B
$1B
$1B
$1.2B
$1.8B
$1.2B
$10B
$1B
SWEDEN
EUROPE
$7.6B
$3.5B
$5.5B
$1.2B
$36B
$2.9B
$3.8B
$2.1B
(as of Q2’15)
There are 66 fintech unicorns valued at $248B
Global VC-backed fintech companies with a private market valuation of $1B+ (as of 6/30/20)
UNITED KINGDOM
SOUTH AMERICA
$10B
BRAZIL
$4.9B
$3.5B
$5.5B
$2.7B*
$2.6B
$2.6B
AUSTRALIA
$2B
$2.8B
AUSTRALIA
$1.8B
UNITED STATES
GERMANY
$3.5B
$5.8B
$3.5B
$1.7B
$1B
$2B
$2B
$1.1B
$3B
$8B
$1.4B
$1B
$1.2B
$1B
$1B
NORTH AMERICA
$1.1B
$1.4B
$1.1B
$1.2B
$3.2B
$1B
$4.8B
$1.8B
$1.9B
$1B
$16B
CHINA
INDIA
ASIA
$1.4B
$39.4B
$1.5B
$1.5B
$2B
SOUTH KOREA
$2.2B
$1B
JAPAN
$1.9B
$1B
$1B
HONG KONG
*Pending M&A
Note: Lemonade IPO’d on 7/2/20
$1B
$1.6B
$1B
$1
$1B
21
$1B
$1B
$1B
$1.2B
$1.8B
$1.2B
$10B
$1B
SWEDEN
EUROPE
$7.6B
$3.5B
$5.5B
$1.2B
$36B
$2.9B
$3.8B
$2.1B
(as of Q2’15)
Q2’20 saw 1 new fintech unicorn birth
Upgrade, an online lending and credit monitoring platform, is the newest fintech unicorn.
UNITED KINGDOM
SOUTH AMERICA
$10B
BRAZIL
$4.9B
$3.5B
$5.5B
$2.7B*
$2.6B
$2.6B
AUSTRALIA
$2B
$2.8B
AUSTRALIA
$1.8B
UNITED STATES
GERMANY
$3.5B
$5.8B
$3.5B
$1.7B
$1B
$2B
$2B
$1.1B
$3B
$8B
$1.4B
$1B
$1.2B
$1B
$1B
NORTH AMERICA
$1.1B
$1.4B
$1.1B
$1.2B
$3.2B
$1B
$4.8B
$1.8B
$1.9B
$1B
$16B
CHINA
INDIA
ASIA
$1.4B
$39.4B
$1.5B
$1.5B
$2B
SOUTH KOREA
$2.2B
$1B
JAPAN
$1.9B
$1B
$1B
HONG KONG
*Pending M&A
Note: Lemonade IPO’d on 7/2/20
$1B
$1.6B
$1B
$1
$1B
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#AhaCBI
Q2’20 Fintech
Sector Trends
23
PAYMENTS
BANKING
ALTERNATIVE
LENDING
WEALTH
MANAGEMENT
INSURANCE
CAPITAL
MARKETS
SMB
REAL ESTATE
Companies creating new solutions
personal or commercial lending
Mortgage lending, transaction
digitization, and financing
platforms
Digital-first banks or companies
digitizing banking services for
credit and debit
Payments processing, card
developers, money transfer, and
tracking software
Personal finance tools, investment
and wealth management platforms,
and analytics tools
Companies selling or distributing insurance
digitally or providing data analytics and
software for (re)insurers
Sales and trading, analysis, and
infrastructure tools for financial
institutions
Companies focused on
providing solutions to small-
to-medium sized businesses
W H A T TH E S TA TE O F F I N TE C H
C O V ERS
24
BANKING
ALTERNATIVE
LENDING
WEALTH
MANAGEMENT
INSURANCE
CAPITAL
MARKETS
SMB
REAL ESTATE
GL O B AL VC - B AC K ED
F I N T E C H Q2’ 2020
PAYMENTS
25
Payments funding holds steady in Q2’20
Global VC-backed payments financing trends, Q2’19 – Q1’20 ($M)
$2,733
$2,772
$3,915
$3,439
$3,451
86
65
120
91
86
0
20
40
60
80
100
120
140
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
# Of Deals
Total Funding ($M)
26
Shopify’s growing payments revenue illustrates
potential of embedded fintech in e-commerce
Source: Company filings
E M B E D D E D F I N T E C H : P A Y M E N T S
In Q1’20, merchant solutions
revenues accounted for 60% of
total revenues, driven primarily by
payment processing fees.
27
Reducing payments friction is key as online
retail spending stays elevated
Note: Clients can see companies streamlining retail store checkout in this market map post.
28
Checkout conversion solutions are poised to
capitalize on accelerating global e-commerce
Q2’20 Funding: $7M Series A
Select Investors: Global Founders,
Arbor Ventures, Wamda Capital
Tabby enables consumers in the UAE
and Saudi Arabia to pay for online
purchases either in a deferred single
payment or in multiple installments.
Q2’20 Funding: $6M Series A
Select Investors: Kickstart Fund, Next
Frontier Capital
Chargeback protects against credit
card fraud and helps merchants stay
compliant.
Q2’20 Funding: $3M Seed
Select Investors: Bain Capital Ventures,
SV Angel, Digital Currency Group
Lolli is a bitcoin rewards application
that lets people earn bitcoin when they
shop online.
PoS LENDING
FRAUD PREVENTION
REWARDS
29
Mobile money is finding success in the world’s
fastest-growing middle-class population
Source: United Nations, Quartz, GSMA
30
Early-stage companies are looking to enable
consumer and merchant payments in Africa
Q2’20 Funding: $1M Angel
Select Investors: Google for Startups
Accelerator, Fast Track Malmo, Seedrs
Eversend is a multi-currency e-wallet
and neobank that allows users in Africa
to exchange, spend, and send money.
Q2’20 Funding: $14M Series A
Select Investors: Kickstart Fund, Next
Frontier Capital
Chipper Cash is enabling free and
instant P2P cross-border transactions
in Africa.
Q2’20 Funding: Incubator
Select Investors: Binance Labs,
LongHash Hatch
Xend is a payments platform that
allows SMEs to send money, pay bills,
and make transfers.
MOBILE WALLET
P2P PAYMENTS
SMB PAYMENTS
31
Big Tech sees payments as a foothold into
global fintech opportunities
Big Tech companies are investing heavily in payments products. Facebook and Google are eying these
tools to expand into emerging markets like Brazil and India.
Apple Pay
Google Pay
Facebook Pay &
WhatsApp Pay
Amazon Pay
WhatsApp Pay for Brazil Deals New
Blow to Banks
June 18, 2020 |
WhatsApp launches payments service, 2
years after it began testing in India
June 16, 2020 |
32
PAYMENTS
ALTERNATIVE
LENDING
WEALTH
MANAGEMENT
INSURANCE
CAPITAL
MARKETS
SMB
REAL ESTATE
GL O B AL VC - B AC K ED
F I N T E C H Q2’ 2020
BANKING
33
Banking deals decline for second straight
quarter while funding remains flat
Global banking VC-backed financing trends, Q2’19 – Q2’20 ($M)
$3,356
$3,757
$2,158
$2,332
$2,251
82
78
80
63
54
0
10
20
30
40
50
60
70
80
90
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
# Of Deals
Total Funding ($M)
34
LatAm fintechs are building the infrastructure to
launch open banking services
E M B E D D E D F I N T E C H : B A N K I N G
Several financial infrastructure startups are supporting the next generation of consumer banks in Latin
America as regulators move to support open banking initiatives.
“Galileo Financial Technologies pioneers
expansion into Mexico with Mastercard
certification and major strategic partnership
with Klar”
May 1, 2020 |
MEXICO
Last Funding:
$10M Seed / Q2’20
Focus: Open Banking
Last Funding:
$3M Seed / Q2’20
Focus: Open Banking
COLOMBIA
BRAZIL
Last Funding:
$21M Series A / Q2’20
Focus: Open Banking
35
There is a broad ecosystem for services
supporting next-gen digital banks
Expert Intelligence clients can learn more about these startups in this analysis.
36
Widespread lockdowns and branch closures
have increased the need for digital banking
Well-funded startups have piled into the banking market, but Covid-19 may accelerate consolidation as
leading challenger banks look to gain market share and expand their product offerings.
Revolut on the hunt for acquisitions
May 5, 2020 |
37
Several digital banks raise mega-rounds in Q2’20
Sources: TechCrunch, Contxto, Altfi
Most Recent Funding: $241M Series D
Valuation: Undisclosed
HQ: San Francisco, CA
Select Investors: HarbourVest Partners,
The Rise Fund, Gallatin Point Capital
Traction: Varo has doubled its customer
base since late 2019 to 2M users. Deposits
have increased 350% so far this year.
Most Recent Funding: $100M Series D
extension
Valuation: $3.5B
HQ: Berlin, Germany
Select Investors: Tencent Holdings, Valar
Ventures
Traction: N26 has 5M customers as it expands
into new markets like the US and Brazil while
exiting others, including the UK.
Most Recent Funding: $75.7M Series G
Valuation: $1.57B
HQ: London, UK
Select Investors: Accel, Y Combinator,
General Catalyst, Thrive Capital, Stripe
Traction: Despite its 4M customers, Monzo
raised its Series G at a 40% discount to its
previous valuation.
Most Recent Funding: $300M late-stage
round
Valuation: $10B
HQ: Sao Paulo, Brazil
Select Investors: Sequoia Capital, Kaszek
Ventures, Ribbit Capital
Traction: Nubank has grown its user base by
25% to 25M since the beginning of 2020.
38
Some challenger banks offer new credit and
wealth management products
Sources: TechCrunch, LendingTree Investor Relations, Stash
Most Recent Funding: $40M Series D
Valuation: $1B
Select Investors: USV, Ribbit Capital, Santander InnoVentures
Focus: While most upstart banks lead with savings accounts, Upgrade offers
personal loans and credit cards. The company plans to launch a checking
account and debit rewards later this year.
Traction: Upgrade has originated over $3B in loans since its 2018 launch. The
company is cash-flow positive with a $100M annual revenue run rate.
Most Recent Funding: $112M Series F
Valuation: $812M
Select Investors: USV, T. Rowe Price, LendingTree, Goodwater Capital
Focus: Stash is a comprehensive personal financial app that combines
banking, investing, financial advice, and a rewards program to improve
financial health.
Traction: Stash has over 4.5M customers and holds over $1B in assets under
management. It has also given over 11.5M fractional shares to customers
through its Stock-Back rewards program.
39
Point is combining a credit card-style rewards
program with a debit card product
Point Card is a mobile banking app that offers
financial products like rewards cards, offers and
perks, and high-yield deposit accounts.
The company combines a rewards debit card with a
no-fee checking account.
Select Investors: Y Combinator, Valar Ventures,
Kindred Ventures, Financial Venture Studio
Latest Funding:
$10.5M
Last Funding Round:
Series A / Q2’20
40
PAYMENTS
BANKING
WEALTH
MANAGEMENT
INSURANCE
CAPITAL
MARKETS
SMB
REAL ESTATE
GL O B AL VC - B AC K ED
F I N T E C H Q2’ 2020
ALTERNATIVE
LENDING
41
Alternative lending funding increases, driven by
Nubank’s $300M raise
Global VC-backed alternative lending financing trends, Q2’19 – Q2’20 ($M)
$2,796
$2,844
$1,275
$866
$1,668
74
74
68
42
55
0
10
20
30
40
50
60
70
80
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
# Of Deals
Total Funding ($M)
42
Demand for paycheck advance services as an
employee benefit grows amid pandemic
Source: Federal Reserve Report May 2020
E M B E D D E D F I N T E C H : L E N D I N G
0%
5%
10%
15%
20%
25%
30%
35%
Payday loan or
paycheck advance
Pawn shop or auto
title loan
Tax refund
advance
Any borrowing
service
Alternative financial services used by the
underbanked/unbanked in the US
Among those using any alternative financial services
Among adult population
Most Recent Funding: Series D
Select Investor: General Catalyst, Kleiner Perkins, Fidelity,
Generation Management
Focus: Gusto is an HR platform focused on SMBs. The company
offers Gusto Cashout, which gives employees early access to
earned wages. The company claims that 89% of Cashout users
reported less financial stress and 73% of users said it prevented a
bank overdraft.
43
Big Tech wants a piece of ‘buy now, pay later’
In 2020, Amazon and Apple both added options for interest-free installments. Amazon’s Pay
Later is also live in India.
“buy now, pay later”
44
Startups offering alternative ways to borrow see
traction among the unbanked/underbanked…
Most Recent Funding: Incubator/accelerator
Select Investors: MasterCard Start Path
Focus: Zinobe leverages data, technology, and
APIs to provide credit to underserved consumers
and small businesses. Zinobe says it has
delivered 1M loans to customers.
Most Recent Funding: $15M Series A extension
Select Investors: Foundation Capital, Andreessen
Horowitz, Monashees+, Quona Capital
Focus: ADDI offers POS lending solutions to
customers who shop at online stores in its partner
network.
Most Recent Funding: Series B
Select Investors: India SME investments
Focus: KrazyBee offers installment-based
purchases to college students without requiring
credit history.
45
…and are also building products to address the
financial needs of underserved SMBs
Most Recent Funding: $11.4M Series D extension
Select Investors: Bertelsmann, India Quotient, Sistema Asian Fund, Fullerton India
Focus: Lendingkart offers working capital to SMBs. It uses alternative variables to
assess creditworthiness.
Traction: Lendingkart has provided over 100K loans to roughly 89K SMBs in 1,300
cities.
Most Recent Funding: $20M Series B extension
Select Investors: VinaCapital, Vertex Ventures SE Asia, FMO, Siam Cement
Group, OpenSpace Ventures, K3 Ventures, Vertex Growth
Focus: Validus is a peer-to-peer lending marketplace for underserved SMBs in
Singapore. It assesses SMB credit and provides growth financing options using
data analytics and AI.
Traction: Validus has funded approximately $350M in loans to SMBs.
46
PAYMENTS
BANKING
ALTERNATIVE
LENDING
INSURANCE
CAPITAL
MARKETS
SMB
REAL ESTATE
GL O B AL VC - B AC K ED
F I N T E C H Q2’ 2020
WEALTH
MANAGEMENT
47
Wealth funding exceeds $1B in Q2 as deal
activity rebounds
Global VC-backed wealth management financing trends, Q2’19 – Q2’20 ($M)
$426
$785
$268
$450
$1,146
43
49
43
28
32
0
10
20
30
40
50
60
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
# Of Deals
Total Funding ($M)
48
$11
$65
$373
$15
$16
$25
$67
$112
$430
$25
$33
$102
Trade Republic
Stash
Robinhood*
Wahed Invest
M1 Finance
Pagaya
Wealth tech startups across the board are raising
larger rounds as competition heats up
Startups raise bigger rounds as trading activity surges amid Covid-19. Funding in $M.
Note: Robinhood raised an additional $170M in Q3’20. Total Series F funding is $600M.
Latest funding (as of Q2’20)
Previous funding
49
Source: Factset, CNBC
Large asset managers benefit from spike in new
brokerage accounts as day trading gains popularity
135K
244K
386K
363K
608K
609K
E*Trade
TD
Ameritrade
Charles
Schwab
E*Trade
TD
Ameritrade
Charles
Schwab
Q1'19
Q1'20
New brokerage accounts,
Q1’19 vs. Q1’20
50
Empower Retirement acquires Personal Capital for
$1B to offer an integrated digital financial platform
Source: Businesswire, CB Insights
Asset Under Management: $656B
Asset Under Management: $12.3B
Number Of Users: 9.7M
Number Of Users: 2.5M
Clients: 135,000+
Clients: 24,000+
Focus:
Focus:
•
Retirement plan services
• Complete financial wellness experience for retirement plan
participants
•
Enhanced visibility for plan sponsors
• Differentiated benefit offerings for clients
• Online financial advisor and personal finance platform
• Grow customer base who seek both digital and human advice
• Capture the rollover and out-of-plan retirement assets
• A 51% increase from the company’s last valuation ($660M in Q1’19)
51
Early-stage startups are targeting the financial
health and literacy of the youth and workforce
Most Recent Funding: Incubator/Accelerator
Select Investor: WMN FINtech
Focus: The Wealth Factory offers financial literacy tools and education
through multiple products. Its Credit Stacker app teaches students
about personal finance while WealthyLife designs gamified financial
literacy curriculums and products.
Most Recent Funding: Series A
Select Investor: Trinity Ventures, Andreessen Horowitz, Comcast
Ventures
Focus: Brightside aims to help employers improve the financial health of
their workforce through dedicated financial assistants, smart
technology, paycheck assistance, and other financial products.
52
Robo-advisors launch checking & savings products,
remittance players introduce investment services
Source: Business Insider, Investmentnews
Q2’20 Developments: Betterment added an
FDIC-insured, no-fee checking and savings
account through partnerships with banks like
NBKC bank.
Betterment’s checking and savings account
allows for sweep transfers between each
account, pushing for an easy-to-use savings
vehicle to grow its accumulated $22B in AUM.
Q2’20 Developments: Ellevest launched a
membership model that includes a no-fee Mastercard
debit card and Spend and Save bank accounts. The
robo-advisor, targeted at women, provides tools that
address debt pay off, investing to build wealth, career
coaching, and day-to-day budgeting.
The Ellevest Spend & Save accounts provide round-
ups on everyday purchases with no minimum
balances, transfer fees, or overdraft fees.
Q3’20 Developments: TransferWise announced it
will launch investment products on its cross-
border payments platform in the next 12 months,
allowing users to invest their deposits and adding
a new revenue stream.
The remittance fintech already boasts 8M users
and $2.5B in deposits, attracting potential
customers looking for fintech startups fulfilling
more than one financial need.
53
PAYMENTS
BANKING
ALTERNATIVE
LENDING
WEALTH
MANAGEMENT
CAPITAL
MARKETS
SMB
REAL ESTATE
GL O B AL VC - B AC K ED
F I N T E C H Q2’ 2020
INSURANCE
54
Insurtech deals drop 12% QoQ while funding rises 77%
Global VC-backed insurtech financing trends, Q2’19 – Q2’20 ($M)
$1,500
$1,558
$2,109
$876
$1,548
76
89
70
75
66
0
10
20
30
40
50
60
70
80
90
100
$0
$500
$1,000
$1,500
$2,000
$2,500
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
# Of Deals
Total Funding ($M)
55
Automakers are using data to improve embedded
insurance offerings
Source: CB Insights Earnings Transcripts
E M B E D D E D F I N T E C H : I N S U R A N C E
“A lot of that insurance cost is just because the insurance
companies don't have good information about the drivers and
that there is no good way to provide feedback where it's a very
poor feedback mechanism in terms of the insurance rates
versus the actual way that the car is being driven, whereas we
can do that in real time.”
– Elon Musk, Q4’19 Tesla earnings call
Insure
BrightDrive™
OEMs offering embedded insurance
56
Lemonade’s market cap exceeds $4B, putting its
trailing 12-month price/sales ratio at over 50x
For highlights of Lemonade’s S-1, clients can check out our analysis here.
57
D2C insurtech startups are positioning to
become licensed insurers
Most Recent Funding: $50M Series B
Select Investors: New Enterprise Associates,
Core Innovation Capital, Valar Ventures
Focus: Bestow is a digital life insurer that
uses new data and analytics to provide term
life products for customers. In April, the
company announced it had obtained an
insurance carrier license.
Most Recent Funding: $100M Series D
Select Investors: Horizons Ventures, Felicis
Ventures
Focus: Hippo is a digital homeowners’
insurance provider that uses smart home
sensors to better detect and price risks. In
June, it acquired Spinnaker Insurance
Company, which holds insurance licenses in
46 states.
Most Recent Funding: $127M Series B extension
Select Investors: Greycroft, SVB Capital, Sirius
International Insurance Group
Focus: Pie Insurance offers small business
workers’ compensation insurance through its
digital platform. The company said that $100M
of its most recent funding would be dedicated to
building or buying a licensed insurance carrier.
58
Covid-19 shutdowns make usage-based auto
insurance attractive for some consumers
59
PAYMENTS
BANKING
ALTERNATIVE
LENDING
WEALTH
MANAGEMENT
INSURANCE
SMB
REAL ESTATE
GL O B AL VC - B AC K ED
F I N T E C H Q2’ 2020
CAPITAL
MARKETS
60
Deal activity continues decline while funding
jumps to $1.9B, bolstered by 8 mega-rounds
Global VC-backed capital markets financing trends, Q2’19 – Q2’20 ($M)
$1,977
$1,926
$1,630
$1,482
$1,942
77
72
65
59
51
0
10
20
30
40
50
60
70
80
90
$0
$500
$1,000
$1,500
$2,000
$2,500
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
# Of Deals
Total Funding ($M)
61
New service providers are supporting financial
institutions by improving their digital infrastructure
Source: Reuters
E M B E D D E D F I N T E C H : C A P I T A L M A R K E T S
Collibra is a data intelligence company. The cloud-based
platform aims to improve how firms manage, store, and
use their internal data.
Select Investors: Dawn Capital, capitalG, Battery
Ventures, Index Ventures, ICONIQ Capital, Durable Capital
Partners
Latest Funding:
$112M
Last Funding Round:
Series E+ / Q2’20
62
Capital markets see a new quarterly high for
mega-rounds
Q2’20 saw 8 mega-rounds ($100M+) go towards capital markets companies. This surpassed the
quarterly record high set in Q2’18.
2
7
5
6
3
5
4
2
5
8
Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20
280M Series E+
210M Series E+
145M Series C
135M Series C
112.5M Series E+
100M Series C
100M Series D
100M Series E+
Robinhood
Carta
BioCatch
Aspiration
Collibra
Cross River Bank
Onfido
Payfone
Robinhood and Carta both raise $200M+ rounds
Mega rounds increase for 2nd straight quarter
63
The post-Covid world will require digital identity
solutions for remote authentication
Digital identity solutions to support a touchless customer onboarding experience in financial services
have seen a surge in media coverage.
Why Digital Identity Verification Is
Crucial Post-Covid
May 19, 2020 |
64
Digital identity solutions aim to reduce
compliance costs and improve onboarding
B2B authentication products have received significant investor interest as banks and other financial
service providers look to lower compliance costs and reduce their exposure to regulatory risk.
Q2’20 Funding: $100M Series D
Select Investors: M12, TPG Growth,
Salesforce Ventures, Crane Venture
Partners
Onfido offers an AI-based technology
with facial biometrics to assess
whether a user's government-issued ID
is genuine or fraudulent.
Q2’20 Funding: $100M Series E+
Select Investors: RRE Ventures,
MassMutual Ventures, Wellington
Management, Synchrony, Apax Digital
Payfone is a digital identity
authentication platform provider using
mobile phone data for activities such
as account opening, existing customer
authentication, and fraud prevention.
Q2’20 Funding: $93.5M Series E+
Select Investors: Accel, Foundation
Capital, Riverwood Capital, KKR,
Meritech Capital Partners
ForgeRock is a global, open source
vendor behind the I3 Open Identity
Platform. The company delivers a
digital identity platform for a cloud
environment.
65
PAYMENTS
BANKING
ALTERNATIVE
LENDING
WEALTH
MANAGEMENT
INSURANCE
CAPITAL
MARKETS
REAL ESTATE
GL O B AL VC - B AC K ED
F I N T E C H Q2’ 2020
SMB
66
SMB funding and deal activity grow for second
straight quarter
Global VC-backed SMB financing trends, Q2’19 – Q2’20 ($M)
$979
$1,857
$389
$782
$1,825
24
35
21
37
48
0
10
20
30
40
50
60
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
# Of Deals
Total Funding ($M)
67
Business services unicorn raises funding to
embed bill pay software within SMBs’ tech stack
Source: Reuters
E M B E D D E D F I N T E C H : S M B
AvidXchange is an accounts payable (AP) and payment
automation solutions provider that automates
invoice and payment processes for mid-market
businesses.
The company will use its recent funding to expand its
existing business and pursue “opportunistic acquisitions.”
Select Investors: Lone Pine Capital, Mastercard,
Neuberger Berman, Pivot Investment Partners, TSSP
Latest Funding:
$128M
Last Funding Round:
Series E+ / Q2’20
68
Startups are automating the back office for SMBs
Sources: TechCrunch
Most Recent Funding: $4.3M Seed
HQ: Paris, France
Select Investors: Partech Partners,
Kima Ventures, Global Founders Capital
Focus: Pennylane is a platform for
managing company financial data.
Most Recent Funding: $29.2M Series B
extension
HQ: Berlin, Germany
Select Investors: Battery Ventures, AXA
Innovation Campus, Deutsche Bank Digi-
Venture Fund, Saban Ventures
Focus: Zeitgold offers a mobile app designed
for small businesses, allowing users to
perform financial tasks such as booking and
accounting.
Most Recent Funding: $16.3M Series A
HQ: Barcelona, Spain
Select Investors: CRV, Creandum, Point
Nine Capital, K Fund
Focus: Factorial is an HR Solution for
SMBs. It aims to improve employees'
compensation with benefits such as
health insurance, meal vouchers,
transportation, gym memberships, and
others.
Most Recent Funding: $4.4M
HQ: Madrid, Spain
Select Investors: Undisclosed
Focus: Anfix provides cloud accounting
applications for small businesses in Spain.
The business management tool has over
15K users.
69
Expense management and revenue intelligence
services for SMBs gain traction
Most Recent Funding: $80M private equity round
HQ: Cherry Hill, NJ
Select Investors: Bregal Sagemount
Focus: Corcentric offers procurement and finance
solutions that help companies manage their
spending and cash flow.
Most Recent Funding: $22M Series B
HQ: San Francisco, CA
Select Investors: Google Ventures
Focus: Digits for Expenses helps SMBs track and manage
expenses through integrations with accounting software
platforms, banks, payroll providers, and credit cards.
Most Recent Funding: $2M Seed
HQ: Indianapolis, Indiana
Select Investors: Elevate Ventures, Service Provider
Capital, High Alpha, IU Ventures
Focus: Canopy is a revenue intelligence platform for
SMBs that connects, analyzes, and monitors data
across revenue teams.
70
PAYMENTS
BANKING
ALTERNATIVE
LENDING
WEALTH
MANAGEMENT
INSURANCE
CAPITAL
MARKETS
SMB
GL O B AL VC - B AC K ED
F I N T E C H Q2’ 2020
REAL ESTATE
71
Real estate deals fall to 5-quarter low
Global VC-backed real estate financing trends, Q2’19 – Q2’20 ($M)
Note: Q1’20 funding was driven predominantly by Ziroom’s $1B Series C and Beike Zhaofong’s $1.5B Series D extension.
$2,150
$2,939
$1,596
$1,117
$1,091
89
88
88
75
70
0
10
20
30
40
50
60
70
80
90
100
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
# Of Deals
Total Funding ($M)
72
Zillow integrates fintech within real estate
Source: Zillow Investor Relations Presentation May 2020
E M B E D D E D F I N T E C H : R E A L E S T A T E
73
Remote online notarizations surge
40% during pandemic
June 23, 2020
Fannie Mae forecasts mortgage rates
under 3% for 2021
April 22, 2020
Loan applications for home purchase hit
11-year high
June 17, 2020
Record low mortgage rates drive purchase
activity and urgency for digital transformation
Mortgage credit tightens, creating drag
on any economic recovery
May 25, 2020
74
Startups offer homeowners trapped liquidity
Most Recent Funding: $150M Series B
HQ: San Francisco, CA
Select Investors: Union Square Ventures,
Techstars, Tribe Capital, Breega Capital
Company Description: Noah, formerly
Patch Homes, allows homeowners to
access up to $350K through equity sharing.
Noah benefits from home value
appreciation and shares losses in the event
of depreciation.
Most Recent Funding: $20M Series B
HQ: New York, NY
Select Investors: Blumberg Capital, QED
Investors, Correlation Ventures, Moderne
Ventures
Company Description: EasyKnock offers 2
products including Stay & Sell, a home sale-
leaseback, and MoveAbility, which buys a
homeowner’s existing home and leases it back
while the owner looks for a new home.
Most Recent Funding: $15.8M Series A
HQ: San Francisco, CA
Select Investors: BlueRun Ventures,
Assurant Growth Investing, Leap Global
Partners, Correlation Ventures
Company Description: Haus is an equity
sharing platform that enables homeowners
to access up to $120K in cash. Like Noah,
Haus shares in the appreciation and
depreciation in the home’s value.
Most Recent Funding: $10.5M Series A
extension
HQ: San Francisco, CA
Select Investors: OMERS Ventures,
Initialized Capital
Company Description: Landed offers an
equity sharing program that enables
educators to purchase homes in the
communities where they work. Landed
contributes up to $120K to get a 20% down
payment.
75
Covid-19 acts as a catalyst for digitizing real
estate closings in the US
Note: RON stands for remote online notarization, which enables digital signing of key closing documents
•
Prior to Covid-19, only 23 US states had
enacted remote notarization laws.
•
By May 22, 2020, most of the US had
implemented some form of digitized
notarization law, but many are set to expire or
require renewal.
•
In March 2020, the SECURE Notarization Act of
2020 was introduced in the US Senate to
establish minimum requirements to enable
RON federally.
Source: States Title
76
Startups powering digital transactions gain traction
Most Recent Funding: $123M Series C
Valuation: $623M
Select Investors: Greenspring Associates, Foundation Capital, FifthWall Ventures
Focus: States Title is a San Francisco-based platform focused on using predicative
analytics to underwrite title insurance and facilitating the home closing process.
Traction: In 2019, its revenues reached $200M, growing transaction volume by 100x
YoY. Following States Title’s acquisition of North American Title Group, the
combined entity closed or issued close to 500K transactions. Customers include
large mortgage lenders.
Most Recent Funding: $49M Series B
Valuation: Undisclosed
Select Investors: Scale Venture Partners, Zigg Capital, Bessemer Venture
Partners, Gramercy Ventures
Focus: New York-based digital title agency Spruce uses software to perform
title search, policy, settlement, and escrow services for residential real
estate transactions.
Traction: Spruce has enabled over $1.25B in transaction volume and has
grown revenues by 400% annually.
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#AhaCBI
Fintech Funding
Appendix
78
Annualized deals and dollars fall to pre-2018 levels
$17,399
$20,874
$19,903
$41,916
$37,432
$17,237
$34,587
1,299
1,480
1,816
2,146
2,078
849
1,720
0
500
1,000
1,500
2,000
2,500
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
2015
2016
2017
2018
2019
2020
Funding ($M)
Funding run rate
Deals
Deal run rate
# Of Deals
Total Funding ($M)
Global VC-backed fintech financing trends, 2015 – 2020 (as of Q2’20)
79
Later-stage deals continue to gain share as
fintech ecosystem matures
% of quarterly deal activity by deal stage, Q1’17 – Q2’20
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q1'17
Q2'17
Q3'17
Q4'17
Q1'18
Q2'18
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
Series E+
Series D
Series C
Series B
Series A
Seed / Angel
80
Seed/angel deals see the largest decline since
Q2’19
Quarterly deal activity by deal stage, Q1’17 – Q2’20
211
192
199
191
229
196
194
190
214
157
200
171
133
90
97
106
88
104
124
124
125
137
139
137
120
130
130
88
48
42
59
56
65
67
79
62
72
69
91
70
67
71
20
25
19
21
25
35
38
28
41
29
43
43
29
42
7
13
11
11
15
12
15
8
18 14
20
14
14
16
7
7
10
11
13
7
9
8
8
19
12
12
12
15
Q1'17
Q2'17
Q3'17
Q4'17
Q1'18
Q2'18
Q3'18
Q4'18
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
Seed / Angel
Series A
Series B
Series C
Series D
Series E+
81
Deal activity slides around the world QoQ
Global VC backed fintech deals by continent, Q2’19 – Q2’20
212
226
210
187
158
134
105
114
114
99
111
176
143
126
119
Q2
Q3
Q4
Q1
Q2
2019
2020
North
America
17
16
19
10
10
7
8
8
9
5
5
9
8
6
5
Q2
Q3
Q4
Q1
Q2
2019
2020
Asia
Europe
South
America
Africa
Australia
82
Funding rebounds from Q1 except in Asia
Quarterly funding ($M) by continent, Q2’19 – Q2’20
$5,733
$4,479
$4,930
$3,662
$4,980
$1,333
$4,555
$2,764
$2,566
$1,620
$1,686
$1,641
$1,144
$1,650
$1,747
$11
$318
$95
$43
$310
$349
$705
$319
$27
$374
$8
$66
$128
$9
Q2
Q3
Q4
Q1
Q2
2019
2020
North America
Asia
Europe
Australia
South America
Africa
83
The most active fintech VCs from Q2’19 – Q2’20
By unique fintech company investments (new or follow-on)
* Sequoia includes its US, China, and India funds
Rank
Investor
Select Fintech Investments
1*
2
3
4
5
84
The most active fintech VCs from Q2’19 – Q2’20
By unique fintech company investments (new or follow-on)
Rank
Investor
Select Fintech Investments
6
6
8
9
10
85
The most active fintech VCs from Q2’19 – Q2’20
By unique fintech company investments (new or follow-on)
Rank
Investor
Select Fintech Investments
11
12
12
14
14
86
Company
HQ
Deal Date //
Amount Raised
Total Disclosed
Funding
Select Investors
Description
US – CA
Apr '20 // $600M
$1,950M
($36B valuation)
Google Ventures, Sequoia Capital, General
Catalyst, Andreessen Horowitz
Payments processing software
US – CA
June '20 // $600M
$1,395M
($8.6B valuation)
Sequoia Capital, New Enterprise Associates,
Ribbit Capital, 9yards capital, Unusual Ventures
Retail trading platform
Brazil
Jun '20 // $300M
$1,395M
($10B valuation)
Kaszek Ventures, Ribbit Capital, Sequoia Capital
Digital challenger bank
US – CA
Jun '20 // $241M
$418M Progressive, The Rise Fund, Gallatin Point
Capital, HarbourVest Partners
Digital challenger bank
US – MA
June ‘20 // $230M
$364M
Insight Partners, Temasek, Whale Rock Capital
Management, Dragoneer Investment Group,
Kayne Anderson Rudnick, Neuberger Berman
Insurtech
US – NY
Mar '20 // $225M
$1,492M
General Catalyst, Lakestar, Baillie Gifford & Co.,
Khosla Ventures, Thrive Capital, Coatue
Management, Alphabet
Insurtech
Stripe and Robinhood raise the largest rounds
Q2’20 fintech funding rounds of $150M or higher
*Indicates unicorn deal
87
Company
HQ
Deal Date //
Amount Raised
Total Disclosed
Funding
Select Investors
Description
US – CA May '20 // $210M
$654M Montage Ventures, Andreessen Horowitz,
Lightspeed Venture Partners, Tribe Capital
Equity management software
Australia
Apr '20 // $160M
$362M
($1.8B valuation)
DST Global, Tencent Holdings, Salesforce
Ventures, Sequoia Capital China
B2B cross-border payments
US – CA May '20 // $150M
$765M
($3B valuation)
Lone Pine Capital, DST Global
Corporate credit cards
England
Jun '20 // $150M
$380M
($5.5B valuation)
Insight Partners, Blossom Capital, DST Global,
Coatue Management, GIC
Online POS and payment processing
US – CA May '20 // $150M
$526M
($4.3B valuation)
Lone Pine Capital, Coatue Management,
CommerzVentures, Visa Ventures, Spark Capital
Card issuing platform
US – CA
Apr '20 // $150M
$156M Tribe Capital, Techstars Ventures, Union Square
Ventures, Kima Ventures
Home equity sharing platform
3 of the top deals went to cos outside the US
88
Methodology
CB Insights encourages you to review the methodology and definitions employed to better understand the numbers presented in this
report. If you have any questions about the definitions or methodological principles used, we encourage you to reach out to CB Insights
directly. Additionally, if you feel your firm has been under-represented, please send an email to info@cbinsights.com and we can work
together to ensure your firm’s investment data is up to date.
What is included:
What is excluded:
― Equity financings into emerging fintech companies. Fundings must be put into VC-backed
companies, which are defined as companies who have received funding at any point from
venture capital firms, corporate venture groups, or super angel investors.
― Fundings of only private companies. Funding rounds raised by public companies of any
kind on any exchange (including Pink Sheets) are excluded from our numbers, even if they
received investment by a venture firm.
― Only includes the investment made in the quarter for tranched investments. If a company
does a second closing of its Series B round for $5M and previously had closed $2M in a
prior quarter, only the $5M is reflected in our results.
― Round numbers reflect what has closed — not what is intended. If a company indicates
the closing of $5M out of a desired raise of $15M, our numbers reflect only the amount
which has closed.
― Only verifiable fundings are included. Fundings are verified via various federal and state
regulatory filings, direct confirmation with firm or investor, or press release.
― Previous quarterly VC reports issued by CBI have exclusively included VC-backed rounds.
In this report, any rounds raised by VC-backed companies are included, with the
exceptions listed.
— No contingent funding. If a company receives a commitment for $20M subject to hitting
certain milestones but first gets $8M, only the $8M is included in our data.
— No business development/R&D arrangements, whether transferable into equity now, later, or
never. If a company signs a $300M R&D partnership with a larger corporation, this is not equity
financing, nor is it from a venture capital firm. As a result, it is not included.
— No buyouts, consolidations, and/or recapitalizations. All three of these transaction types are
commonly employed by private equity firms and are tracked by CB Insights. However, they are
excluded for the purposes of this report.
— No private placements. These investments, also known as PIPEs (Private Investment in Public
Equities), are excluded even if made by a venture capital firm.
— No debt/loans of any kind (except convertible notes). Venture debt or any kind of debt/loan
issued to emerging startup companies, even if included as an additional part of an equity
financing, is not included. If a company receives $3M with $2M from venture investors and
$1M in debt, only the $2M is included.
— No government funding. Grants, loans, or equity financings by the federal government, state
agencies, or public-private partnerships to emerging startup companies are not included.
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included in this report
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