If trying to understand the emerging business models, technologies and disruption in Fin Tech, one of the smart ways we are seeing financial services firms do this is by following deals and investor money flowing into Fin Tech companies. But instead of tracking all investors, let’s follow the smart VC money since as we all know, not all VCs are created equal.
And within the Fin Tech universe today, the smart money VCs are investing in technologies ranging from peer-to-peer loan marketplaces to mobile payments to big data tools for capital markets.
As new innovation rapidly makes its way through the financial services sector, Fin Tech investments across the entire ecosystem have exploded in recent years. Of note, a recent report released by Accenture and the New York City Investment Fund using CB Insights data found global Fin Tech investments reached nearly $3B in 2013 from under $930M in 2008.
This research brief highlights the Fin Tech investment activity of 12 of the top venture firms as identified by our tech unicorn VC analysis. The VC firms whose Fin Tech investments are analyzed include:
- Accel Partners
- Andreessen Horowitz
- Battery Ventures
- Benchmark Capital
- Bessemer Venture Partners
- CRV
- Greylock Partners
- Kleiner Perkins Caufield & Byers
- New Enterprise Associates
- Redpoint Ventures
- Sequoia Capital
- Union Square Ventures
The data below.
2014 will be a record year for smart VC investment in Fin Tech
Looking at deal activity within the Fin Tech market since 2007 by these 12 VC firms, we see a significant surge in deal activity since 2009. In fact, total Fin Tech deals by the 12 firms in 2013 grew 61% compared to 2010 and a notable 309% compared to 2009. The growth in Fin Tech deals accounts for both new investments as well as follow-on bets to Fin Tech startups ranging from Stripe to Wonga to Betterment to Level Money.
Which areas within Fin Tech are top VCs bullish on?
Using the CB Insights’ Business Social Graph, we visualized the universe of Fin Tech companies that the 12 VC firms have invested in since 2007 and find hundreds of deals within Fin Tech that the top firms have participated in.
While Fin Tech investments span a diverse array of companies ranging from payments to asset management to personal financial management, there appear to be several themes that these brand-name venture firms see opportunities in. When we use the Business Social Graph inputs and cluster companies by focus area, four markets emerge as being consistent areas of focus among the top 12 venture firms. These include
- Lending
- Personal finance management
- Payments technology
- Bitcoin
With hundreds of investments, there are many fledgling as well as many more established private companies on the list. Some of the startups which feature investment from multiple investors include Square (backed by Sequoia and Kleiner Perkins), Boku (Benchmark, NEA, A16Z), Stripe (Sequoia, Redpoint, A16Z), Coinbase (A16Z, Union Square Ventures) and Funding Circle (Accel, Union Square Ventures).
As financial services institutions increasingly begin to monitor the changing landscape before them, following the smart money is perhaps one of the best ways to understand the trends they should stay ahead of and the companies they may want to watch from a competitive, acquisition, partnership or procurement perspective.
A list of Fin Tech companies included in this analysis is available on the ‘Research’ tab, after logging in to CB Insights. Note: This research is only available to paid subscribers with access to CB Insider. Want more data and analytics on the Fin Tech space? Check out the CB Insights Venture Capital Database. Sign up free below.
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