North American and European Fintech Firms Attracted Substantial Funding in 2020 but Number of Deals Declined: Report

North American and European Fintech firms experienced a 17% year-over-year (YoY) growth during Q3 2020, which brings the total to $8.9 billion raised in venture capital investments, compared to $7.6 billion secured in Q2 2020.

Although these are solid gains, there were just 414 deals finalized during the third quarter of 2020, according to research from Comprar Acciones. This is notably the lowest number of deals since Q3 of 2017. The Comprar team noted that these figures indicate that “more capital went into fewer funding rounds in the three-month period.”

Fintechs focused on certain segments like payments have seen explosive growth this year as more consumers shop, trade and conduct banking activities online following the COVID-19 outbreak and lockdown measures.

Among the deals recording the largest gains were funding rounds for Fintech firms, the report confirmed. Some of the leaders included zero-free trading app provider Robinhood, payment processing giant Stripe, and digital bank Chime.

Stripe had the highest valuation increase this year, according to data from Pitchbook. The Fintech firm raised $850 million via its Series G round, which increased its valuation by 60% from $22.5 billion to $36 billion.

Comprar pointed out that “the increases seen in their valuations had to do with the fact that they are big entities and relatively mature.”

Although US based VC firms have seen extremely high appraisals recently, funding in Europe’s tech sector has also gained as the industry continues to benefit from the pandemic-induced “shift to digital,” according to the Atomico State of European Tech report.

Private funding is expected to reach a record $41 billion and, according to Atomico, 18 firms have managed to achieve Unicorn status this year — a startup valued at $1 billion or more.

As noted in other Fintech industry reports, many firms raised mega-rounds this year ($100 million or more). They include Sweden’s Klarna ($650 million) and Northvolt ($600 million); the United Kingdom’s Revolut ($580 million), Karma Kitchen ($317 million) and Cazoo ($310 million); Germany’s Auto1 Group ($300 million), Lilium ($275 million) and Tier ($250 million); France’s Mirakl ($300 million) and Romania’s UiPath ($225 million).

As covered recently, the tech sector has been a “net beneficiary” of the accelerated shift to digital platforms in Europe due to COVID, according to a new report.

Fintech deals and dollars could see a decline this year from 2019 despite a Q4 2020 recovery, according to a recent report from CBInsights.

Fintech and Regtech adoption has taken a major step forward in 2020 as businesses prepare for a post COVID environment, according to new report.

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