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The 10 Largest Fintech Funding Rounds of 2019

Fintech funding really heated up in 2019, here are the ten biggest deals of the year

January 6, 2020 By Ryan Lichtenwald Leave a Comment

Last year we saw continued interest in a broad array of fintech companies. Recently the fintech space has become more mature, bringing in ever larger rounds to the more established fintech companies. At the beginning of 2019 we began to track the fintech deals over $10 million and we are doing the same for 2020. In 2019 we recorded 199 funding rounds representing over $14 billion invested. Here are the ten largest funding rounds from our list. The total investment from these rounds alone was over $4 billion.

1. Greensill

SoftBank is no stranger to committing large amounts of capital and their $800 million investment in Greensill was just another example of that. Greensill has more than doubled their growth rate annually since 2015 and at the time the round was announced was valued at $3.5 billion. The company operates in the supply chain finance space. They plan to accelerate their growth in Brazil and enter other markets including China and India. Read more

2. Chime

Chime’s brought in a $500 million funding round making a big splash at the end of the year. They are one of the leaders in the digital banking space and are valued at $5.8 billion. The round was led by DST Global and they intend to use the funds to hire employees and expand into more products. CEO Chris Britt also discussed the possibility of making fintech acquisitions. Read more

3. SoFi

SoFi is one of the more well known fintechs in the US. This has been a result both of their marketing spend, having secured the naming rights to a new stadium in Los Angeles and their success in branching out into multiple product offerings. The $500 million round was led by Qatar Investment Authority, valuing the company at approximately the same valuation as their previous round of $4.3 billion. Read more

4. Klarna

Klarna operates in the buy now, pay later space and was founded all of the way back in 2005. They raised $460 million in August 2019, making them Europe’s most valuable fintech startup at $5.5 billion. Klarna is planning to use the funds in part to expand to the US, similar to plans of many of the other leading fintechs in Europe. They are also one to keep an eye on for a potential future IPO. Read more

5. OakNorth

Just behind Klarna comes another large investment in a European fintech with OakNorth’s $440 million fundraising round in early 2019. OakNorth is different than most making this list in that they are a bank focusing on serving small and medium sized growth businesses. They operate a lending business and have also licensed their technology to banks in at least nine different countries. Read more

6. Nubank

Nubank is the only fintech from South America making the list. The Brazil-based company raised a $400 million Series F round in July and reportedly fetched a valuation over $10 billion. Nubank which offers a variety of financial products to consumers had over 12 million customers as of July 2019 which makes it the sixth largest financial institution by customer count in Brazil. They also recently expanded to Mexico and Argentina. Read more

7. Robinhood

Robinhood is best known for their free stock trading app and they raised $323 million in 2019. What’s interesting is that many of their competitors have cut commissions on trading but it’s clear that Robinhood wants to expand beyond free trading into other financial products. They recently announced a revamped savings product after a failed launch in late 2018. The company had 6 million customers at the end of 2018, a number which has surely grown since making them well positioned as they move into new areas. Read more

8. Affirm

Affirm is well known in the US with their point of sale finance solution. The $300 million Series F round included Thrive, Fidelity, Wellington Management, Ballie Gifford, Sound Ventures as well as existing backers Founders Fund and Khosla Ventures. Read more

9. N26

N26 is most well known in Europe but officially launched in the US in 2019. The $300 million round valued the company at $2.7 billion. At the time of the announcement on January 9, 2019 the challenger had 2.3 million customers in 24 European markets. Read more

10. TransferWise

TransferWise raised $292 billion in May and planned to use the funds to hire 750 more team members. More recently the company reported that they handle $5.25 billion in transactions every month and have over 6 million users. 24% of their payments now happen in under 20 seconds. Read more

Conclusion

With such a large amount of interest in fintech in 2019 it is hard to imagine how 2020 will shape up. There have been some industry experts that have taken pause with the valuations some of these companies have been fetching, but it seems like that had little impact on the deals we saw close throughout 2019. We’ll be keeping a close eye in 2020 and look forward to hearing updates from many of these companies at our upcoming LendIt Fintech USA event in May.

Are Digital Banks Struggling to Get Traction?

A new survey suggests that digital banks are not getting much traction yet but there is more to the story

May 22, 2019 By Peter Renton 4 Comments

An article in Forbes earlier this month about the traction of digital banks caught my attention. A survey of U.S. consumers conducted by Cornerstone Advisors showed that traction among many of these new neobanks (I use this term and digital bank interchangeably in this article) is not happening as quickly as many of us expected. According to the survey only 3% of millennials have their primary checking account at a digital bank like Chime, Simple or Moven.

The survey also found that only 7 million deposit accounts have been opened at digital banks and that only Ally, Chime and BankMobile have more than one million deposit accounts. Simple, the first digital neobank to launch almost 10 years ago, has just 517,000 accounts according to the survey.

Now, when Chime announced they had raised $200 million in March they claimed to have opened 3 million FDIC-insured bank accounts. So, it is quite possible this survey is undercounting the total or that maybe there is a difference between an open account and a funded one. Regardless, we have a long way to go before any digital bank can challenge the size of even a midsized regional bank.

There are, of course, many other neobanks not included in the survey. At LendIt Fintech USA 2019 last month the CEO of MoneyLion, Dee Choubey, said that his company has more than 4 million users today. Another example is Square Cash, which has over 15 million monthly active users and with the debit card some consumers are using this as a primary bank account. So, one could even include Square Cash as a neobank (Square is in the process of applying for a banking license).

All this should be put in the context of a special report in The Economist earlier in the month with the cover exclaiming “Tech’s raid on the banks”. One of the many interesting stories in that report was about “Flanker banks” where banks create a new brand to compete with themselves. We have seen that at JPMorgan Chase with Finn and Greenhouse by Wells Fargo and there are numerous examples internationally. But according to the Cornerstone Advisors survey Finn is not getting much traction yet – their number of 47,000 accounts is surprising, if not shocking, to me. Greenhouse is still in limited rollout.

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Well Fargo Outage Points to Opportunity in Digital Banking

Wells Fargo finds itself in a tough position after bank goes offline for almost 24 hours.

February 13, 2019 By Todd Anderson Leave a Comment

Wells Fargo is still digging out from a PR disaster last week when the bank went offline for a large segment of customers due to a fire alarm triggered in a server facility in Minnesota. Customers could not access the mobile app, the website or ATMs. The incident has been used to highlight how big an opportunity there is for fintech firms or more nimble banks.

What the outage shows is that bank infrastructure is still stuck in the past, analysts rightly asked why Wells Fargo did not have the bank running on a cloud based system.