An Acceleration in Fintech Capital Raising

There has been a healthy level of new funding deals closed in recent weeks. What we want to do in this post is highlight some of these. This is by no means an exhaustive list but rather an interesting mix of fintech companies who have recently raised equity and/or debt capital. Seemingly every day there is a new capital raise or two; digital banks, blockchain startups, AI companies and insurtech firms have all raised capital

The recent CB Insights Fintech Trends Briefing points to the rise in fintech financings as Q3’17 saw 278 deals to VC-backed fintech companies, the largest quarter since Q1’12. While total capital invested is down 25 percent from Q2’17 to $4bn the pace of the deals show investors appetite for fintech companies is still very strong.

Below you will find a diverse worldwide sample of fintech companies:

China – Megvii Face++
Facial recognition startup Megvii Face++ raised $460mn in their most recent investment round led by China State-Owned Venture Capital Fund and the China-Russia Investment Fund; Ant Financial was also involved in the round and the company did not disclose valuation, though their most recent round valued the company at $1.5bn; Face++ uses facial recognition to identity people and counts Ant Financial and the Chinese government as two of their biggest clients.

Germany – Spotcap
German based online lender Spotcap raised $26mn in equity and debt funding. Existing investors participated in the funding round which brought total capital raised to $116mn. They plan to use the funds to continue building out their intermediary partner network for an increased global market share.

USA – Credit Sesame
Credit Sesame, a San Francisco and Mountain View, Calif. – based personalized credit service and financial wellness company, raised over $42mn in funding. The funding is comprised of $26.6mn in equity and $15.5mn in venture debt. Investors in the round include Menlo Ventures, Inventus Capital, Globespan Capital, IA Capital, SF Capital, among others, along with a strategic investor. The funds will be used to accelerate the company’s growth, hiring, and member acquisition, and to advance its analytics, robo-advisor and machine learning technologies.

USA – FS Card Inc.
FS Card Inc., a Washington, DC-based financial services company focused on underserved consumers, raised a $150mn credit facility. The source of the funds were not disclosed. The company intends to use the proceeds to expand its growth efforts and to sustain their current portfolio.

USA – Finova Financial
Finova Financial, provider of fair and affordable digital alternatives for Americans underserved by the traditional banking system, secured $102.5mn in equity and credit facility funding. The round was led by CoVenture with participation from existing investors. The funds will be used for expansion of its digital financial services products to transform the future of banking.

USA – LendingHome
LendingHome, a San Francisco, CA-based real estate marketplace lender, raised $457mn in capital, which includes both permanent equity and the launch of LendingHome Opportunity Fund II. $57mn was a Series C-2 with participation from previous and new strategic investors, including Sberbank and Noah Holdings Limited. The company intends to use the funds to expand the size of the engineering team and invest in the continued growth of digital mortgage product for homebuyers and property investors.

USA – BlueVine
BlueVine, a Redwood City, CA-based provider of working capital financing to small and medium-sized businesses, secured up to $130mn in debt capital financing. Backers included Silicon Valley Bank, SunTrust Bank, Bank Leumi and TriplePoint Venture Growth BDC Corp. The company plans to use the new funds to support the scaling of their pioneering online invoice factoring product and the current growth strategy.

USA – Feedzai
Feedzai, a San Mateo, Calif.-based provider of an artificial intelligence (AI) driven platform for enterprises to manage risk and fight fraud in real-time, closed $50mn funding round. The capital came from Sapphire Ventures and additional unnamed VC’s. They plan to use the funds to double their staff and to continue growing market share.

USA – Roofstock
Roofstock, an Oakland, Calif.-based online marketplace for single-family rental home investing, closed $35m in Series C financing. The round was led by Canvas Ventures with substantial participation from existing investors Lightspeed Venture Partners, Bain Capital Ventures, Khosla Ventures, Nyca Partners, QED Investors, and FJ Labs. The round will help the company meet customer demand, break into new markets, and accelerate development of new tech features.

U.K. – OakNorth
OakNorth, a London, UK bank that provides debt finance to fast-growth businesses and established property developers, received a $202mn investment. The capital infusion comes from The Clermont Group, Toscafund and Coltrane. The company intends to use the funds to continue to expand its business reach.

U.K. – SalaryFinance
SalaryFinance, a London U.K.-based innovative financial wellbeing employee benefits company, completed a $52mn funding round. The round (subject to Financial Conduct Authority approval) was led by FTSE 100 financial services firm Legal & General with founding investor Blenheim Chalcot also participating.

Overall we continue to see companies in the fintech space grow along with strong investor demand. There has been a bit of shift from the days of 2015 where achieving growth and scale were the main drivers of large investment rounds. Today more companies are looking to build long term sustainable businesses where the focus is on profits far more than growth.