Financial Technology Sector Overview – Q1 2018

The financial technology sector has seen a lot of momentum in funding and exits in recent years. As we previously noted, fintech funding has shifted to later stages and its exit events have skyrocketed.

We will now take a closer look at the different components of financial technology and how they make up this startup ecosystem. We have classified the companies into 16 categories. This blog post will illustrate what these categories are and which categories have the most companies. We will also look at how these categories compare with one another in terms of their funding and maturity.

Consumer Lending Is the Largest Financial Technology Category

Let’s start off by looking at the Sector Map for the financial technology sector. As of March 2018, we have classified 2407 financial technology startups into 16 categories that have raised $90 billion. The Sector Map highlights the number of companies in each category. It also shows a random sampling of companies in each category.

Financial Technology Sector Map
Financial Technology Sector Map

We see that Consumer Lending is the largest category with 321 companies. These companies offer new ways for consumers to obtain personal loans and have their credit risks assessed. They include peer-to-peer lending, micro-financing, big data analytics, and consumer credit scoring services. Some example companies are SoFi, CommonBond, Avant, and Lufax.

We have seen what the different categories making up this sector are and the number of companies in each. What about their funding and maturity in relation to one another? Let’s look at our Innovation Quadrant to find out.

Payments Backend Is the Heavyweight Category in Financial Technology

Our Innovation Quadrant divides the financial technology categories into four different quadrants.

Financial Technology Innovation Quadrant
Financial Technology Innovation Quadrant

We see that the Pioneers quadrant has the most financial technology categories with 10. The Pioneer categories are in the earlier stages of funding and maturity. The Disruptors quadrant contains three categories: Consumer Lending, Business Lending, and Consumer Payments. These three categories have acquired significant financings at a young age. The Established quadrant includes Banking Infrastructure and Transaction Security. These two categories have reached maturity with less financing. The Heavyweights quadrant contains the Payments Backend category. This category has reached maturity with significant financing.

It’s interesting to see that both lending categories, Consumer Lending and Business Lending, are Disruptors. This indicates that lending startups have transformed the fintech industry with their venture capital backing at early ages. In addition, the Heavyweight category, Payments Backend, is the one that leads fintech in exit activity as we saw in our exits blog post. This makes sense since mature and well-funded companies are more likely to be acquired or go public than those that aren’t.

We’ve now seen the financial technology categories and their relative stages of innovation. How do these categories stack up against one another? Let’s look at the Total Funding and Company Count Graph.

Consumer Lending Startups Have the Most Funding and Companies

The graph below shows the total amount of venture funding and company count in each category.

Financial Technology Funding and Company Count
Financial Technology Funding and Company Count

As noted earlier, the Consumer Lending category leads financial technology with 321 companies. In addition, the above graphic highlights that Consumer Lending also leads in funding with over $28 billion. Some of the best-funded companies in this category are JD Finance ($3.01B), SoFi ($2.08B), and Avant ($1.78B).

It’s noteworthy that the funding in Consumer Lending is 81% higher than the funding in the next category, Business Lending. Business Lending companies offer new ways for businesses to raise debt financing and have their credit risks assessed. Some example companies include Bond Street, LendInvest, BlueVine, and Funding Circle.

Conclusion: The Consumer Lending Category Leads the Fintech Sector

From the above analysis, we can see the Consumer Lending category leads financial technology in funding and company count. On the other hand, the Payments Backend category stands out as the Heavyweight category in our Innovation Quadrant. It has reached maturity with significant average funding per company versus other categories. It’ll be interesting to see how the financial technology landscape will change and develop throughout the rest of 2018.

To learn more about our complete financial technology report and research platform, visit us at www.venturescanner.com or contact us at info@venturescanner.com.

Where in the world are Financial Technology startups? Q3 2017

The analyses below summarize where Financial Technology (Fintech) innovations are occurring. The graphic includes data through July 2017.

Fintech Q3 2017 Company Count by Country

The above map shows the number of Fintech companies located in different countries. The United States ranks as the top country with around 1125 companies.

Fintech VC Funding by Country Q3 2017

The above map shows the amount of total Fintech startup venture capital funding in different countries. The United States has the most VC funding at around $35B.

We are currently tracking 2,305 Fintech companies in 16 categories across 64 countries, with a total of $75B in funding. Click here to learn more about the full Financial Technology startup market report.

Financial Technology Startup Market Trends and Insights  – Q3 2017

Here is our Q3 2017 summary report on the Financial Technology (fintech) startup sector. The following report includes a startup landscape overview, graphical trends with insights, and recent funding and exit events.

We are currently tracking 2,277 Fintech companies in 16 categories across 64 countries, with a total of $73 Billion in funding. Click here to learn more about the full Financial Technology market report.

Financial Technology Market Overview and Innovation Quadrant – Q3 2017

The following post highlights how Venture Scanner categorizes the Financial Technology (Fintech) startup landscape, and presents our Innovation Quadrant showing how those categories compare to one another. The data for this post is through July 2017.

Fintech Logo Map Q3 2017

The above sector map organizes the sector into 16 categories and shows a sampling of companies in each category.

Fintech Innovation Quadrant Q3 2017

Our Innovation Quadrant provides a snapshot of the average funding and average age for the different Fintech categories and how they compare with one another.

  • Heavyweights: These categories are comprised of companies that have reached maturity with significant financing.
  • Established: These categories are comprised of companies that have reached maturity with less financing.
  • Disruptors: These categories are comprised of companies that are less mature with significant financing.
  • Pioneers: These categories are comprised of companies that are less mature with earlier stages of financing.

The definitions of the Fintech categories are as follows

Banking Infrastructure: Companies that offer new ways for businesses to raise debt financing and have their credit risk assessed. Examples include peer-to-peer lending platforms, asset-based lines of credit, micro-financing, and big data risk analytics.

Digital Banking: Companies that allow consumers and SMBs to interface with banking services. Examples include Internet-only banking services and virtual credit cards.

Consumer Lending: Companies that offer new ways for consumers to obtain personal loans and have their credit risk assessed. Examples includes peer-to-peer lending, micro-financing, big data analytics, and consumer credit scoring services.

Consumer Payments: Companies that offer technology and services centered around payment issuers and consumers. Examples include mobile wallets, credit card aggregators, prepaid card innovations, and peer-to-peer payments.

Crowdfunding: Companies that provide new methodologies to raise non-equity and non-debt financing. Examples include crowdfunding platforms for products, social causes, and creative projects.

Equity Financing: Companies that allow private businesses to raise capital in exchange for equity and for investors to participate in private securities markets. Examples include crowdsourcing equity platforms and secondary market solutions.

Financial Research and Data: Companies that provide information services that enable investors to make better investment decisions. Examples include news, research, and data sources.

Financial Transaction Security: Companies that provide solutions to secure transactions, authenticate users, and prevent fraud. Examples include identify verification, big data analytics, and fraud detection algorithms.

Institutional Investing: Companies that help wealth managers, hedge fund managers, and professional traders manage their portfolios and optimize returns. Examples include tools for stock sentiment analysis, alternative investment platforms, and algorithmic trading tools.

International Money Transfer: Companies that allow businesses and individuals to send money abroad easily and cheaply. Examples include digital-only remittances, mobile top-off services, and gift cards.

Payments Backend and Infrastructure: Companies centered around payment issuers/acquirers and the infrastructure enabling payments. Examples include payment solutions for e-commerce merchants, online payment gateways, ACH, direct deposits, and payment back-ends for mobile apps.

Personal Finance: Companies that provide ways for consumers to manage their personal finances. Examples include tools for tracking expenses, managing a budget, addressing wrongful credit card charges, and optimizing credit card rewards.

Point of Sale Payments: Companies centered around payment acquirers, providing physical payment solutions for brick-and-mortar businesses and organizations. Examples include mobile point-of-sales (POS) systems and POS innovations (e.g. QR code, palm scanners).

Retail Investing: Companies that provide new ways for consumers to invest in various securities. Examples include theme-based investments, crowdsourced investment expertise, unbiased algorithmic investment advice, and investment social networks.

Small and Medium Business Tools: Companies that offer solutions that help small and medium sized businesses manage their finances. Examples include tools for taxes, payroll, invoicing, and accounting.

We are currently tracking 2,277 Fintech companies in 16 categories across 64 countries, with a total of $73 Billion in funding. Click here to learn more about the full Financial Technology market report.

Financial Technology Activity by Selected Investors – Q3 2017

The following graph summarizes investor activity in the Financial Technology (Fintech) space. Please note these graphics are made using data through April 2017.

Fintech Investor Activity Q3 2017

The above analysis summarizes the total number of investment rounds Fintech investors participated in, and the number of unique companies funded by selected investors. Major investors into the space include Accel Partners, Sequoia Capital, YC, 500 Startups, and Index Ventures.

We are currently tracking 2,276 Financial Technology companies in 16 categories across 64 countries, with a total of $72 Billion in funding. Click here to learn more about the full Financial Technology market report.

Venture Investing in Financial Technology through Q3 2017

The following graphs highlight venture investing trends into the Financial Technology sector. The graphics include data through April 2017.

Fintech Venture Investing Q3 2017

The above graph compares the total venture funding in each Fintech category to the number of companies in the category. The Consumer Lending category leads both metrics, with around $18B in funding and about 300 startups.

Fintech Category Average Funding Q3 2017

The above analysis summarizes the average company funding in each Fintech category. The Consumer Lending category leads the sector with just over $95M in average funding per company, followed by the Payments Backend and Business Lending categories.

We are currently tracking 2,261 Fintech companies in 16 categories across 64 countries, with a total of $71B in funding. Click here to learn more about the full Financial Technology market report.

Where in the world are Financial Technology startups? Q2 2017

The analyses below summarize where Financial Technology (Fintech) innovations are occurring. The graphic includes data through April 2017.

Fintech Q2 2017 Company Count by Country

The above map shows the number of Fintech companies located in different countries. The United States ranks as the top country with around 1100 companies.

Fintech Q2 2017 VC Funding by Country

The above map shows the amount of total Fintech startup venture capital funding in different countries. The United States has the most VC funding at around $34B.

We are currently tracking 2,237 Finech companies in 16 categories across 64 countries, with a total of $71B in funding. Click here to learn more about the full Financial Technology market report.