A report from CBInsights reveals that $31.1B in global funding was acquired by Fintech startups during Q3 2021—which is the “second-highest quarter ever.” Despite falling around 16% when compared to the past quarter’s record levels, financing remains elevated in the Fintech venture space. This last quarter’s $31.1B tally reportedly marks a 147% increase year-over-year (YoY).
During this time period, there were 43 “freshly minted” Unicorns (companies reaching a valuation of at least $1 billion). According to the CBInsights report, there are now 206 Fintech unicorns, which is twice the Q3’20 count.
This quarter notably marks the second-highest number of new unicorn births, “after a high in Q2’21.” As confirmed in the update, there was $14.6B in US quarterly funding with US Fintech funding surging 21% YoY to reach $14.6B in Q3’21.
The US accounted for almost half of total Q3’21 funding, “despite making up just 39% of total deals,” the report added. There were 94 mega-rounds worth $100M+ and Q3’21 saw the second-highest quarter for Fintech mega-rounds, with 94 deals made.
This is reportedly “the third consecutive quarter in which mega-rounds drove the majority of global fintech funding, accounting for 64% of quarterly funding. 63% early-stage deal share YTD.”
As stated in the report from CBInsights:
“A steady stream of new entrants continues to bolster the fintech innovation pipeline, accounting for 63% of deal activity in Q3’21. In 2021 YTD, 65% of early-stage deal activity happened outside of the US — the most of any deal stage.”
As covered in July 2021, CBInsights had quantified the amount of risk capital being dedicated to global Fintechs and Q2 hit a record pace. According to the report, the second quarter of 2021 was the largest funding quarter ever for Fintechs.
CBInsights cites 657 deals that raised a record $30.8 billion “shattering” Q1’s funding record by 30%.
The research states that funding grew across the board with the exception of Capital Markets and Wealthtech. The hot sectors are digital banking, lending SMB Fintech that experienced solid growth. Much of the funding was driven by super-sized funding rounds as successful Fintechs got even bigger.
During the quarter, there were 88 mega-rounds – funding that topped $100 million. In Q1, there were only 60 mega-rounds. The average deal size stood at $47 million.
Exits have picked up steam too. Whether by SPAC or IPO, there were 19 public exits of Fintechs. And there are more coming this year.
CBInsights divided up Fintechs into 8 different categories. According to their point of view, these categories are as follows:
- Payments and transfers
- Insurance (Insurtech)
- Digital Banking
- Capital Markets
- Digital lending
- SMB or companies providing solutions to smaller firms
- Wealth Management or Wealthtech
- Real Estate
- If you divide things up, in a quick overview:
Payments generated $8 billion in venture funding during Q2 2021, an increase of 25% quarter over quarter.
Here are some other key highlights from Q2:
- Banking jumped by 43%
- Digital lending saw funding increase 78% quarter over quarter to $7 billion
- Wealthtech declined by 21% to $4.4 billion
- Insurtech rocketed by 79%
- Capital markets dipped by 10% (after a record Q1) to $5.1 billion
- SMBs grew by 37% to $5.9 billion
- Real Estate venture funding increased by 25% quarter over quarter to $3.2 billion