Payment platform Razorpay raised the highest amount at $100 million accounting for 18.04% of the total amount raised by the sampled companies. Canadian investment firm Wealthsimple raised the second-highest amount at $87 million followed by intelligent security solutions provider Deepwatch at $53 million. NYDIG, a company providing the full suite of digital asset services to premier institutions, had the fourth-highest amount raised at $50 million while M1 Finance closes the top five categories with $45 million. Elsewhere, Evolve Credit raised the least amount among the highlighted companies at $0.025 million, while Upside Saving raised the second least funds at $0.42 million. Notably, they are the only two companies to raise under $1 million. It is worth mentioning that the amount might slightly change due to currency conversions.
Funding exhibiting Fintech’s growing activity
The high amount raised by the highlighted companies shows the growing market activity in the fintech industry. With a huge amount of money being poured into the sector, fintech is putting great resources into innovation. The growing maturity of the industry continues to attract several investors like banks, insurance and wealth management firms, and non-banking corporates. These companies are realizing the need to adopt fintech and are making significant investments in startups. Fintech firms are currently existing in all shapes and sizes, and the past few years have witnessed a steady stream of funding. Most of the companies deal with insurance, digital banking, and wealth management. Several trends are fueling investment in this space like the rapid innovations in fintech infrastructure, the re-bundling of financial services offerings, and the increasing level of fintech valuations. Following the coronavirus pandemic, there has also been more focus on challenger banks. This aspect will also fuel more funding in the sector.
Funding moving away from venture capitalists
Notably, venture capital is still the primary source of funding for fintech startups. However, new trends indicate a high level of private equity and debt financing. Additionally, more funding activity is concentrated around later funding rounds. The sector is also witnessing a rise in IPOs and acquisitions. Such trends are pointing to a maturing market. Later stages of funding are more preferred because companies are showing signs of stability. As companies grow and move to later-stage funding rounds, expectations ramp up. Investors usually need these companies to demonstrate a more robust and resilient business plan and be able to point to real-world market results. Currently, investor activity in the financial technology sector is likely to center on the infrastructure and of the fintech ecosystem. With a strong infrastructure, players in the sector can converge product categories and business models across the consumer landscape. Overall, while the fintech industry is still in its early adoption stage, it is well structured to witness long-term growth in the coming years. Most importantly, more investors are projected to focus on digital lending and open banking. Fintech growth will ultimately create outsized opportunities for firms.
