Mint.com, one of the earliest players in the personal finance management space, created waves a few years ago when it was acquired by Intuit for $170M. More recently, Sanford Weill, a former Citigroup Chief, invested in Level — a startup aimed at personal finance management for young people — as part of a $5M financing round. With big names from the world of traditional finance jumping in along with venture capital investors, the personal financial management technology industry is seeing a small boom in financing.
In the past twelve months, personal finance startups have reeled in $343M in venture capital financing spread across 42 deals. The total funding in the space has grown year-over-year by 15.5%; while deal activity has recorded a 23.5% YoY increase.
The personal finance management market encompasses companies that help individuals manage a wide variety of their personal finance needs ranging from their stock and bond investments to banking to budgeting to tax planning and preparation through online-, software- or mobile-based technologies.
Historically, the funding to the sector has been a bit volatile, but the overall trend has been upward for deal activity while funding levels have been largely steady. The financing activity in the personal finance management space in 2013 has been quite consistent – in fact, the space saw its best quarter ever in Q3 2013 in terms of funding dollars, hitting nearly $124M. Several early and mid-stage companies including SigFig, LearnVest, and Check saw rounds upwards of $15M.
While 2013 Q3 has seen fewer deals than Q2, the median deal size has been steadily increasing through 2013 and currently stands at $4.3M. In fact, both the average and median deal sizes have increased by 31% and 100% respectively on a quarter-over-quarter basis.
As is typical in any emerging industry, early stage funding that includes Seed/Angel and Series A rounds makes up a good share of the total deals in the space with a majority of the seed deals being smaller than $1M. By way of comparison, however, personal financial management has a smaller proportion of deals at the seed stage than other emerging industries like ed tech where almost 45% of deals are at the seed/angel stage.
As evidenced by the growing median and average deal size trend above, the personal financial management industry is seeing more deals at the mid and later-stages. Series C deals have seen a 250% YoY increase as companies are maturing and continue to have models and traction which have venture investors excited.