In the first quarter of 2021, fintech’s around the world have collectively raised over US $22.8 billion in investments through 614 deals according to CB Insights. This amount is more than double what was raised in the fourth quarter of 2020. Also, this represents the largest venture capital-backed funding quarter ever. The first quarter 2021 numbers even surpassed the previous funding record from Q2’18 that included Ant Group’s $14 billion funding round.
A lot of the growth this quarter can be attributed to the 57 mega-rounds of $100 million+ that occurred. This also set a record for most mega-rounds ever, accounting for 69% of total funding in the quarter. This made the average deal size for Q1’21 almost double what was seen in Q4’20 – from $19.3 million to $37 million.
North America led the fintech funding race (264 deals/$12.8B), followed by Europe (151 deals/ US $5B) and Asia (147 deals/ US $3.7B). Combined, these three regions accounted for over 90% of the total fintech funding for the quarter. While Australia (11 deals/ US $193M) and South America (20 deals/ US $999M) both saw modest increases in deals, Africa saw a 22% drop in deals during Q1’21 (21deals/ US $45M). Something to point out is Europe’s growth almost tripled from quarter four of 2020, this is due to its mega-rounds which accounted 68% of the continents total funding. You should care about this record funding because traditional players look toward Venture Capital trends to assist them in prioritizing which strategies to pursue.
When you break down funding to the many different sectors that received them, you can see significant growth this quarter while others don’t. The sectors that saw the largest funding were payments, digital banking, digital lending, and wealth management sectors.
Payments saw funding triple from the previous quarter, with 114 deals raking in over US $6 billion. Mega-rounds accounted for over 75% of total funding.
Digital banks or “Neobanks” saw deals decline 12% to 65 from the quarter earlier but saw funding grow 25% during the same period. This was the third consecutive quarter of funding growth.
Digital Lenders saw their funding triple to US $4 billion! The number of deals doubled to 102, with eight meg-rounds in the quarter.
Wealth management saw a massive growth spurt with a 5x increase in funding to US $5.4 billion. Companies in this space have created products and services that change the way people invest, save, and manage their money. An astonishing 63% of the funding was the result of two rounds totaling US $3.4 billion for popular trading app Robinhood.
Marous, Jim. “Global Fintech Funding Explodes During First Quarter of 2021.” The Financial Brand, 28 Apr. 2021, www.google.com/search?q=the+financial+brand.