Fintech Exit Activity Sees Robust Growth

The Financial Technology (fintech) sector has seen a lot of exit activity over the past few years. How does the number of exit events trend over time? Based on our fintech research platform, we have analyzed the data through 2017 and can conclude that fintech exit activity is seeing continued robust growth.

This observation was derived from two takeaways:

  • Fintech exit events are demonstrating strong annual growth
  • Fintech exit events are increasing at the quarterly level as well

We’ll illustrate these takeaways with two graphics that show the solid growth of fintech exit activity over time.

Fintech Exit Events Showing Strong Annual Growth

We’ll start off by examining the fintech exit events from 2011 to 2017. Exit events include both acquisitions and Initial Public Offerings (IPOs). The below graph shows the number of annual fintech exit events stacked by quarters.

Fintech Exits by Quarter - Stacked
Fintech Exits by Quarter – Stacked

This graph illustrates that fintech exit activity is demonstrating strong growth year over year. In fact, the Compound Annual Growth Rate (CAGR) in exit activity grew by 49% from 2012 to 2017. In addition, the number of exit events in 2017 is the highest ever and amounts to a 133% growth year over year.

Let’s now see if this trend holds at a quarterly level.

Fintech Exit Events Increasing At the Quarterly Level

Below is a graph of the number of fintech exit events by quarter.

Fintech Exits by Quarter - Cluster
Fintech Exits by Quarter – Cluster

The above graph shows that the overall fintech exit activity is on an upward trend at the quarterly level. Generally speaking, each quarter in 2017 saw a larger number of exits than in 2016. The number of exit events in Q4 2017 is 106% of that in Q4 2016. Q1 2017 was a particular outlier, seeing a huge 189% increase over Q1 2016. The only exception is Q2 2017 which fell slightly from Q2 2016.

From these two graphics we have now seen that fintech exit activity experienced vigorous growth at both the annual and quarterly levels.

Conclusion: Fintech Exit Activity Is Seeing Robust Growth

In summary, we have seen that the number of fintech exit events is showing strong growth year over year. Moreover, these exit events are increasing at the quarterly level as well.

We can conclude from these takeaways that fintech exit activity is seeing continued robust growth–which corresponds with our conclusion from the fintech funding blog post that the fintech sector is maturing as a whole. It’ll be interesting to see if this trend continues into 2018.

What are your thoughts on this? Let us know in the comments section below.

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.

FinTech Q1 Update in 15 Visuals

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We at Venture Scanner are tracking 1,379 FinTech companies across 16 categories, with a combined funding amount of $33 Billion. The 15 visuals below summarize the current state of Financial Technology.

1. Financial Technology Market Overview

Slide1

We organize Financial Technology into the 16 categories listed below:

Consumer Lending: 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.

Business Lending: New ways for companies 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.

Personal Finance: New 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.

Consumer Payments: Payment companies centered around issuers and consumers. Examples include mobile wallets, credit card aggregators, prepaid card innovations, and peer-to-peer payments.

Payments Backend and Infrastructure: Payment companies centered around 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.

Point of Sale Payments: Payment companies centered around 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).

Equity Financing: News ways for private companies to raise capital in exchange for equity and for investors to participate in private securities markets. Examples include crowdsourcing platforms and secondary market solutions.

Retail Investing: 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: Tools that help small and medium sized businesses manage their finances. Examples include tools for taxes, payroll, invoicing, and accounting.

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

Banking Infrastructure: Solutions that improve the operations of financial institutions. Examples include API integration with banks, white-label mobile solutions, and big-data analytics.

Financial Transaction Security: New ways for companies to secure transactions, authenticate users, and prevent fraud. Examples include identify verification, big data analytics, and fraud detection algorithms.

Crowdfunding: New ways for companies to raise non-equity and non-debt financing. Examples include crowdfunding platforms for products, social causes, and creative projects.

Consumer and Commercial Banking: New ways for consumers and SMBs to interface with banking services. Examples include Internet-only banking services and virtual credit cards.

International Money Transfer (Remittances): 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.

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

2. Company Count by FinTech Category

Slide2

The above graph summarizes the number of companies in each FinTech category to show which categories are dominating the current market. The Consumer Lending category is leading the way with 198 companies, followed by the Personal Finance and Business Lending categories, each with 148 companies.

3. Funding by FinTech Category

Slide3

The above graph summarizes the total amount of funding in each FinTech category. The Consumer Lending category is leading the market with over $12B in total funding, which is 1.5X the total funding of the second highest category, Business Lending.

4. Venture Investing in FinTech

Slide4

The above graph compares the total venture funding in each FinTech category to the number of companies in the category. The Consumer Lending category is leading in both stats with over $12B in funding and 198 companies. Business Lending is the runner-up with $8B funding, and has the second-highest company count along with Personal Finance (148).

5. FinTech Total Funding by Year

Slide5

The above graph summarizes the total funding raised by FinTech companies each year. 2015 was the best year in FinTech funding with a total of $12B raised, which is 1.5X the amount of funding raised in 2014 ($8B).

6. Average Funding by FinTech Category

Slide6

The above graph summarizes the average company funding in each FinTech category. The Consumer Lending category leads the market with $100M funding per company, followed by the Business Lending category at a close second with $92M funding per company.

7. Average Age by FinTech Category

Slide7

The above graph summarizes the average age of companies in each FinTech category. Banking Infrastructure ranks as the most mature FinTech category with an average age of 8 years per company, which is twice the average age as the least mature category, Equity Financing (4 years per company).

8. Median Age by FinTech Category

Slide8

The above graph summarizes the median age of companies in each FinTech category. Banking Infrastructure ranks as the most mature FinTech category with a median age of 7 years per company, followed by Financial Security and Business Payments, each with a median age of 6 years per company.

9. FinTech Company Count by Country

Slide9

The above map shows the number of FinTech companies located in different countries. The United States ranks as the top country with 756 FinTech companies, with the United Kingdom at a distant second with 161.

10. FinTech VC Funding by Country

Slide10

The above map shows the amount of FinTech venture capital funding in different countries. The United States has the most FinTech VC funding at $13B, followed by the United Kingdom at $6B.

11. FinTech Companies Founded by Year

Slide11

The above graph summarizes the number of FinTech companies founded in a certain year. 2012 ranks as the top year with 186 FinTech companies founded, followed by 2013 with 158 companies founded.

12. FinTech Funding by Vintage Year

Slide12

The above graph summarizes the total amount of funding raised by the FinTech companies founded in a certain year. FinTech companies founded in 2011 have raised the most funding at $6.2B, followed by those founded in 2012 with $4.6B funding to date.

13. FinTech Headcount Distribution

Slide13

The above graph summarizes the percentage of FinTech companies with a certain employee headcount range. Companies with 1–50 employees make up 73% of the market.

14. Number of FinTech Investments by Selected Investors

Slide14

The above graph summarizes the total number of investment rounds FinTech investors participated in. Accel outperform all of its peers, having made 79 investments into FinTech companies. This is almost 2X the number of investments made by the runner-up Sequoia Capital with 45 investments.

15. Number of FinTech Companies Backed by Selected Investors

Slide15

The above graph summarizes the number of unique FinTech companies funded by selected investors. Accel takes the top spot by having invested in a total of 54 unique FinTech companies, which is almost 1.5X the number of companies invested by the runner-up, Y Combinator (37 companies).

As FinTech continues to grow, so too will its moving parts. We hope this post provides some big picture clarity on this booming industry.

Venture Scanner is your platform for startup landscapes, data, and research. If you would like access to the full FinTech landscape and dataset, visit www.venturescanner.com/financial-technology or reach out to info@venturescanner.com.

FinTech At a Glance

The following infographic summarizes the FinTech market and all of its key metrics at a glance. You could see that it has 17 categories, 1379 companies, and an average funding of $44 Million per company. At Venture Scanner, we are currently tracking over 1379 FinTech companies in 17 categories across 55 countries, with a total of $33.1 Billion in funding. To see the full list of 1379 FinTech companies, contact us using the form on www.venturescanner.com.

Fintech one-sheeter

Venture Scanner enables corporations to research, identify, and connect with the most innovative technologies and companies. We do this through a unique combination of our data, technology, and expert analysts. If you have any questions, reach out to info@venturescanner.com.