Know about the latest fintech fundings of 2021

The fintech sector is booming with a record US$91.5 billion in global funding so far this year. That's almost twice as much as what the sector collected in the entirety of 2020. The past quarter saw the birth of 42 fintech unicorns (startups valued at over $1 billion), bringing the year's total to 200, according to CB Insights' State of Venture Q3'21 Report. "Financial services are one of the largest industries on the planet, but until recently, the way it operated had remained unchanged for decades," says Satya Patel, co-founder and general partner of venture capital firm Homebrew. "And because of that, there are huge segments of the population that are underserved or ignored by current financial services players. Fintech is changing all of that by decreasing costs, increasing access, and improving experiences for financial products and services," he adds.

The CB Insights report shows Tiger Global Management and Coinbase Ventures lead the pack among fintech investors with 24 and 22 deals in the third quarter, respectively. The U.S. remains the region with the most fintech deals, gaining ground during the last quarter to make up 38% of global fintech deals, followed by Asia with a 26% share. "Some people thought that the internet was winner-takes-all, and that may be true in some markets. But it's usually not true in fintech," says Sheel Mohnot, who has been investing in seed-stage fintech for six years as a general partner at Better Tomorrow Ventures. One-third of all unicorns minted during the last quarter are fintech startups. Bahamas-based FTX, the UK's Revolut, San Francisco-based Chime, and Mexico's Kavak saw the biggest funding rounds in the sector during Q3, amassing a joint $3.2 billion.

Overall global fintech funding across M&A, PE, and VC deals soared to a new high in H1'21, according to KPMG's Pulse of Fintech, a bi-annual report on fintech investment trends. Dry powder cash reserves, increasing diversification in hubs and subsectors, and strong activity across the world contributed to the record start to 2021, with funding increasing from US$87.1 billion in H2'20 to US$98 billion in H1'21. Fintech valuations remained very high in H1 '21 as investors continued to see the space as attractive and well-performing, a likely driver in the explosion of unicorn births with 163 created in the first half of the year. Under pressure to increase the velocity of their digital transformation and to enhance their digital capabilities, corporates were particularly active in venture deals, participating in close to $21 billion in investment over nearly 600 deals globally, with many realizing it's quicker to do so by partnering with, investing in, or acquiring fintech.

Overall fintech investment in the US remained robust in H1'21, reaching $42.1 billion. VC investment in the US was particularly strong, surging past 2020's peak high of $22 billion to reach over $25 billion in H1'21. Big deals included $3.4 billion raised by Robinhood, $600 million raised by Stripe, and $500 million raised by Better, ServiceTitan, and DailyPay. The maturation of the fintech sector was evident in the robust exit activity in the US, including Affirm's successful IPO, the direct listing of Coinbase, the SPAC merger of SoFi with Social Capital Hedosophia Holdings Corp. V, and the SPAC merger of insurance Clover Health with Social Capital Hedosophia Holdings Corp. III. Across the Americas more broadly, fintech investment was also very strong, reaching $51.4 billion in H1'21. VC investment accounted for $31 billion of this total—shattering the previous annual high of $24 billion set in 2020. Continued innovations in financial technology, combined with the dramatic increase in the use of digital offerings have made fintech one of the most active sectors of investment, both from a VC perspective and from an M&A standpoint. The global trend of increasing corporate participation in investment was particularly pronounced in the Americas during H1'21, with $12.8 billion of investment in the first half of the year, compared to $11.4 billion during all of 2020.