Aug 05, 2018

Fintechs Getting Financed Like Wildfire

New financial technology has been on the rise for a number of years. Nowhere is this more apparent than in the funding of new Fintech companies. Venture backed U.S. fintech companies received about 40% more funding in the second quarter of this year than in the previous one, according to a report released Wednesday by CB Insights and PwC.

The deal value of the quarter totaled about $3 billion, providing financial support to a number of promising companies. Notable investments include Notable investments include a $165 million funding round for insurance startup Oscar in March and a $110 million capital injection for San Francisco’s Collective Health in February

Globally, VC-backed fintech companies raised $5.4 billion across 323 deals in the first quarter. Angel investors have played an important role in the development of the fintech sector. Over 85% of fintech companies receive angel investment in their first rounds.

Funding for fintech is prospering because many businesses in the sector are doing quite well. A number of companies have seen huge successes over the last year. In June, Dutch payment startup Adyen NV went public, and saw its shares more than double. In April, Adam Dell’s Clarity Money was acquired by Goldman Sachs Group Inc. for roughly $100 million.

Additionally, public companies in the fintech sector are booming. Jack Dorsey’s Square Inc. is up more than 90% in 2018, and PayPal Holdings Inc. is up more than 20%.

Not only are businesses flourishing, however, consumer behaviors are trending positively towards fintech services. Nearly a million Brits switched their bank account last year, as growing frustration with existing banks led a record 965,317 account holders to ditch their existing bank.

Unfortunately for fintech companies, most people who switched went over to other big banks. Halifax, part of the Lloyds Banking Group gaining a net of 33,942 accounts during the first three months of 2018. Nationwide also gained a substantial total with 28,763 new account holders.

This isn’t necessarily bad news, however, as both large fintechs in great Britain—Monzo and Starling—didn’t have fully operational switching services for the entire first quarter.

In other words, the fintech sector is king of the startups right now and it looks like nothing will stop its momentum anytime soon.

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About the author

Andrew Mosteller
Andrew Mosteller is a freelance writer and regular contributor to Lendio News. His upbringing in an entrepreneurial family nurtured a passion for small business at a young age. Andrew's father, an equity fund manager, taught him the ins and outs of investment financing. Now, Andrew spends his time writing copy for business owners, helping them expand and advertise their unique brands. He's also studying Strategic Communications at the University of Utah. When Andrew's fingers aren't glued to the keyboard, he spends his time reading, podcasting, composing music, and bombing down the ski slopes.

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