Fintechs across the globe reportedly raised a whopping US$94.7 billion in several thousands of funding deals in the third quarter of the 2021.
A report from Insider Intelligence indicates the figure is a record breaker as it is just US$200 million shy of total fintech funding from the past two years combined.
In the USA alone, fintech funding hit US31.1 billion in some 1,185 funding rounds same period, which was second to quarter two’s US$36.8 billion.
For the third consecutive quarter, mega funding rounds accounted for more than half of total funding. There were a total of 257 mega-round deals in the quarter, out of which 94 were more than US$100 million each, and they accounted for 64% of the total.
Reports said late-stage fintechs drove the volume, with median deal size reaching $90 million.
Same period last year, there were 113 mega-round deals so this year’s figure is more than double last year’s.
Meanwhile, wealthtechs stole the show in the quarter, being the only fintech vertical to hit a record number of deals this quarter at 132, up from 131 in Q2.
Early-stage wealthtechs were the main beneficiaries, accounting for 65% of deals this year—up from 59% in 2020—as investors eye huge growth opportunities in that area.
On the B2B side, the startups have a wide addressable market, as 75% of global wealth managers now see digitization as a priority area, and consumers flock such platforms. On that front, therefore, crypto exchange, FTX, raised the highest round of the quarter, at $900 million.
Again, there are now 206 fintech unicorns (with over US$1 billion valuation) globally, after some 43 new one joined the pack in Q3 alone. In the same quarter last year, there were 105.
The largest unicorns are are Stripe ($95B), Klarna ($45.6B), and Revolut ($33B). And while the US remains the largest unicorn hub, Europe is catching up to Asia, as Insider Intelligence predicted. At the end of 2020, Asia had 10 more unicorns than Europe; there’s now only a five-unicorn difference.
Mergers and Acquisitions
Meanwhile, the quarter also saw some considerable number of mergers and acquisitions, at 664 year to date, compared with 540 for all of 2020. The largest acquisitions in Q3 occurred in the payment space, as market players try to scale rapidly in growing verticals.
In the two largest deals, PayU bought BillDeskto grab a bigger piece of India’s digital payment space, and PayPal snagged a Japanese BNPL provider.
The report predicts that fintech funding momentum will be sustained for the rest of this year, adding that, with the use of fintech solutions nearly ubiquitous in major markets like the US, startups’ valuations are inevitably going up, creating a flywheel that entices more investors to back them, which increases valuations even more—and so on.
As a result, funding activity in Q4 is expected to to push global volumes across the $120 billion mark.
