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.

Fintech Sector Matures As Funding Shifts to Later Stages

As previously seen, funding into financial technology has increased significantly in recent years. Now we are going one level deeper on our fintech report and research platform to examine its funding by round. From our analysis we can conclude that the fintech sector is continuing to mature over time.

This conclusion comes from two takeaways:

  • Funding amounts are shifting from early-stage to later-stage events
  • Funding counts are dropping in the Seed round and growing elsewhere

We’ll explain these takeaways with some graphics that show fintech funding activity by round.

To help set the stage, the graphic below illustrates fintech funding amounts over time. As you can see, the sector’s overall funding showed robust growth over the past few years.

Fintech Funding by Quarter
Fintech Funding by Quarter

Fintech Funding Amounts Shifting to Later-Stage Events

Let’s examine the fintech funding amounts by round as a percentage of the total, which show changes independent of the total size.

Fintech Funding Amount Percentages
Fintech Funding Amount Percentages

As shown in the graph, the funding amounts dropped in the Seed and Series A rounds and increased in the Late Stage from 2012 to 2017. Specifically, Seed round funding amounts shrunk from 9% to 3%, and Series A amounts shrunk from 23% to 11%. On the other hand, Late Stage funding amounts grew from 2% to 24% over the same time period.

We see that the funding amount percentages by round indicate a shift from early-stage to later-stage events from 2012 to 2017, would the funding event count graph show the same trend? Let’s examine that in the next section to find out.

Fintech Funding Counts Dropping in Seed Round and Growing in All Other Rounds

The below graph shows the fintech funding counts by round as a percentage of total events.

Fintech Funding Count Percentages
Fintech Funding Count Percentages

This graph supports our previous observation from the funding amount graph. In particular, Seed round funding counts decreased from 63% to 30% from 2012 to 2017. As a result, the funding counts in all other rounds increased by various magnitudes.

Conclusion: Fintech Sector Continues to Mature Over Time

In summary, we have seen that fintech funding amounts shifted from Seed and Series A to later-stage events. Fintech funding counts also dropped in the Seed round and grew in all other rounds. These observations led us to conclude that the fintech sector is continuing to mature over time.

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.

Blockchain Technology Startup Highlights  – Q1 2018

Here is our Q1 2018 summary report on the Blockchain Technology startup sector. The following report includes an overview, recent activity, and a category deep dive.

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

Financial Technology Startup Highlights  – Q1 2018

Here is our Q1 2018 summary report on the Financial Technology startup sector. The following report includes an overview, recent activity, and a category deep dive.

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

Payments Backend Leads Fintech Exit Activity

Last quarter we reviewed fintech exit trends and found robust growth. This quarter we went one level deeper on our fintech research platform and conclude that the Payments Backend category leads fintech exit activity. Companies in this category include technologies impacting payment issuers and acquirers, as well as the infrastructure enabling payments.

This conclusion was derived from three takeaways:

  • Payments Backend leads fintech in the number of exits
  • Payments Backend leads fintech in the acquisition amount
  • Payments Backend also leads fintech in the exit ratio

We’ll illustrate these takeaways with some graphics that show fintech exit activity by category.

To help set the stage, the graphic below shows fintech exit activity over time. As you can see, the sector is experiencing strong growth in exits.

FinTech Exits by Quarter - Stacked
FinTech Exits by Quarter – Stacked

Payments Backend Leads Fintech in the Number of Exits

We’ll start off by examining the exit events in each fintech category. Exit events include both acquisitions and IPOs. The below graph highlights the number of fintech exit events by category.

FinTech Exit Counts by Category
FinTech Exit Counts by Category

This graph shows that Payments Backend leads the sector with 55 exit events. Consumer Payments and Personal Finance come next, with 44 and 43 exit events.

Let’s now see how fintech categories compare with one another by acquisition amount.

Payments Backend Leads Fintech in the Acquisition Amount

The graph below shows the acquisition amounts in different fintech categories.

FinTech Acquisition Amounts by Category
FinTech Acquisition Amounts by Category

We can see from this graph that Payments Backend leads all the other fintech categories by far. The total acquisition amount in this category approximates $25 billion. It’s noteworthy that Payments Backend’s acquisition amount is more than twice the next category, Consumer Payments.

Payments Backend has seen some large acquisitions in recent years. Nets was acquired by Hellman & Friedman in September 2017 for around $5B. Bambora was acquired by the Ingenico Group in July 2017 for around $2 billion. Worldpay was acquired by Vantiv in July 2017 for slightly under $10 billion.

The acquisition amount in Payments Backend represents 31% of that across all fintech categories.

We’ve now seen the leaders in fintech exit activity by event count and acquisition amount. What about the ratio of exit events to the total number of companies in the category? Let’s look at the Exit Ratio by Category graph to find out.

Payments Backend Leads Fintech in the Exit Ratio

The graph below shows the total exits divided by total companies in fintech categories.

FinTech Exit Ratio by Category
FinTech Exit Ratio by Category

Payments Backend, Transaction Security, and Consumer Payments are the leaders in this metric. 24% of Payments Backend companies have been acquired or gone public. The same is true for 23% of Transaction Security companies and 21% of Consumer Payments companies.

Conclusion: Payments Backend Leads Fintech Exit Activity

In conclusion, we have examined fintech exit activity by exit events, acquisition amount, and exit ratio. Payments Backend is the category that leads the sector in all three metrics. Its abundance of exit activity indicates that it is one of the most mature and well-established fintech categories.

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.

Venture Scanner Sector Maps (Part 1 of 2)

Our sector maps are snapshots of emerging technology sectors. They show what the different categories in a sector are and how many startups are within each category. They also present a small sampling of the current startups that are innovating in each category.

We will share our most up-to-date sector maps in a two-part series. Below you will find sector maps for the Blockchain Technology, Energy Technology, Financial Technology, Health Technology, Insurance Technology, Video Technology, and 3D Printing sectors.

Blockchain Technology: 12 categories, 1007 companies, $6B in funding

Blockchain Technology Sector Map
Blockchain Technology Sector Map

Energy Technology: 12 categories, 790 companies, $63B in funding

Energy Technology Sector Map
Energy Technology Sector Map

Financial Technology: 16 categories, 2401 companies, $90B in funding

Financial Technology Sector Map
Financial Technology Sector Map

Health Technology: 22 categories, 2139 companies, $64B in funding

Health Technology Sector Map
Health Technology Sector Map

Insurance Technology: 14 categories, 1503 companies, $22B in funding

Insurance Technology Sector Map
Insurance Technology Sector Map

Video Technology: 11 categories, 828 companies, $35B in funding

Video Technology Sector Map
Video Technology Sector Map

3D Printing: 9 categories, 383 companies, $2B in funding

3D Printing Sector Map
3D Printing Sector Map

Stay tuned as we will release the remaining 8 updated sector maps for Artificial Intelligence, Internet of Things, Marketing Technology, Real Estate Technology, Retail Technology, Security Technology, Transportation Technology, and Virtual Reality.

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

Financial Technology Sector Overview – Q4 2017

As we’ve examined in our previous analyses, the overall funding trends in Financial Technology (fintech) are stable and its exit activity is seeing robust growth, indicating that the sector is maturing as a whole. Yet what are the different components of fintech and how do they make up this startup ecosystem? On our fintech research platform, we have classified the companies in the sector into functional categories. This blog post aims to examine these categories and how they compare with one another through a series of graphics.

Payments-Related Companies Form the Largest Fintech Category

Let’s start off by looking at the Logo Map for the fintech sector. As of January 2018, we have classified 2,285 fintech startups into 16 categories which collectively raised $80 billion in funding. The Logo Map highlights the number of companies in each category and a random sampling of these companies. Please note that, for the sake of brevity, certain related categories have been combined into the same box on the Logo Map. Examples include combining Business Lending and Consumer Lending into Lending, and combining Consumer Payments, Payments Backend, and Point of Sale Payments into Payments.

Financial Technology Logo Map
Financial Technology Logo Map

We have seen what the different categories in fintech are and how many companies are within each category. What about their funding and maturity in relation to one another? Let’s look at our Innovation Quadrant to find out.

Most of the Fintech Categories Are Pioneers

Our Innovation Quadrant for the fintech sector divides the categories within the sector into four different quadrants according to their average funding and average age. The Heavyweights are the categories with companies that have reached maturity with significant financing. The Established are those that have reached maturity with less financing. The Disruptors are less mature but with significant financing. The Pioneers are less mature and with earlier stages of financing.

Financial Technology Innovation Quadrant
Financial Technology Innovation Quadrant

We can see from our Innovation Quadrant above that most of the categories within fintech belong in the Pioneers quadrant. The Point of Sale Payments, Business Lending, Consumer Payments, and Consumer Lending categories have raised more funding and are in the Disruptor quadrant. Infrastructure and Transaction Security are the most mature categories with less funding. Payments Backend is in the Heavyweights quadrant for having reached maturity with significant financing.

We’ve now seen how the fintech sector is categorized and the relative stages of innovation for those categories. How do these categories stack up against one another in a holistic view? Let’s look at the Total Funding and Company Count Graph for Fintech.

Consumer Lending Is the Leading Fintech Category

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

Financial Technology Total Funding and Company Count by Category
Financial Technology Total Funding and Company Count by Category

We can see from the graph above that the Consumer Lending category leads all the other fintech categories by a substantial margin, with a total funding of $24 billion and 302 companies. This category is comprised of companies that offer new ways for consumers to obtain personal loans and have their credit risk assessed. Some example companies in this category include SoFi, Avant, CommonBond, and Affirm.

Conclusion: Lending and Payments-Related Categories Dominate Fintech

The graphics above indicate that the Consumer Lending category stands out against other fintech categories in terms of funding and company count. Moreover, other lending and payments-related categories have also acquired significant financing. It will be interesting to see how this sector turns out in 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.