VC-backed fintech companies raised record funds last quarter and saw a string of fintech unicorn births, including Robinhood, Clover Health, and more.
Last quarter set a record for funding to VC-backed fintech companies, which raised $5.2B across 251 deals (as highlighted in the CB Insights Q2 2017 Global Fintech report). At the current run rate, deals are on pace to increase 5% this year, while investment dollars are on pace to grow 19%.
The quarter also saw new unicorn births, with 5 companies reaching new valuations of $1B+: online lending site Tuandaiwang (valued at $1.5B at the time of its unicorn round), invoice and payment company AvidXchange ($1.4B), online investment platform Robinhood ($1.3B), health insurance startup Clover Health ($1.2B), and cloud-based communication platform Symphony Communication Services ($1B).
Using CB Insights data, we took a closer look at financing trends for global VC-backed fintech companies.
ANNUAL Financing Trends
Deals to global VC-backed fintech startups have grown steadily since 2012, peaking at 944 deals in 2016. While funding similarly grew from 2012 – 2015, last year saw the first decline in annual disclosed equity funding — a slight 4% decrease from a record high of $14.1M in 2015.
In H1’17, fintech companies closed 496 deals worth $8B. At this pace of investment, both fintech deals and funding are on track to reach record highs in 2017.
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QUARTERLY Financing Trends
Funding to global VC-backed fintech companies set a quarterly record in Q2’17, rising 83% to reach $5.2B. Deals experienced less dramatic growth, but still increased 2% from the previous quarter, reaching a five-quarter high of 251.
The spike in funding to VC-backed fintech companies was largely driven by 18 $50M+ deals in Q2’17 (cup from 11 such deals in the same quarter last year). Combined, these investments totaled $3.8B in funding and accounted for approximately 73% of the quarter’s total funding.
The largest deal of Q2’17 was a $1.4B corporate minority investment to mobile internet unicorn One97 Communications, the parent of India-based payments giant Paytm. The round — which brought the company’s total funding up to $2.8B and boosted its valuation to $7B — was backed by Japanese investor SoftBank Group. This marks the largest investment to a VC-backed fintech company since Q1’12.