Post on 12-Dec-2015
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DESCRIPTIONThis is CB Insigh's https://www.cbinsights.com/ brief on FinTech startups ecosystem landscape
Research Brief Page
Bitcoin Startup Investment Continues to Hit New Records
Disaggregation of a Bank Startups Raise Nearly $600M in the Last Year
Corporate Investment Activity into Payments Tech is Slowing
10 UK Fin Tech Startups to Watch
Intuit Has Become One of Techs Most Active Acquirers
Payments Tech Investment Report
Where Is the Smart VC Money Going in Fin Tech?
Unlike MasterCard & Visa, American Express Looks Far Beyond
Payments for Venture Investments
Mobile PoS Upstarts See Increased Investment Interest
The Boom in Global Fin Tech Investment Fin Tech Grabs $3B in 2013
P2P Lending Startups Take More Than Twice As Much VC
Funding As Crowfunding Platforms
Bitcoin startup investments now total over $400M in aggregate
funding. Q4'14 is already at record deal and funding levels (and
there is more than a month to go).
Bitcoin prices have fallen below $400 but that hasnt stopped investors from plowing dollars into emerging digital currency companies ranging from
bitcoin wallets to data providers to block chain APIs.
According to CB Insights data, investments in the bitcoin space hit an all-
time quarterly high of over $107M already in Q4 2014 and there is still
more than a month to go in the quarter. Deal activity in the space has also
hit new highs in Q4 as well. The funding activity has been boosted by a
handful of notable deals including Blockstream which raised $21M from
investors including Reid Hoffman, Khosla Ventures and Real Ventures. Last
month saw bitcoin wallet Blockchain and bitcoin mining firm BitFury Group
raise $30.5M and $20M, respectively. The deal sizes within the bitcoin space
are definitely stepping up in size.
In total, bitcoin startup investments now total over $400M in aggregate
funding. Its a far cry from Q2 2013, when total funding was under $25M and there were more investors than investor-backed startups in the bitcoin
Bitcoin startup funding vs. close price
Most interestingly, the rise in bitcoin startup investments has come as the
price of bitcoin has dropped drastically since hitting record highs in
November 2013. Using bitcoin close price data from Bitstamp, we analyzed
aggregate funding to bitcoin startups vs. BTC close price since July 2010.
The contrast is notable. Since September, bitcoin prices have steadily dipped
below $400 while funding to the space continues to accumulate.
Top Bitcoin startup funding rounds
The top 10 rounds to startups in the bitcoin ecosystem to date are listed below. Interestingly, Xapo and BitFury appear twice on the list due to
tranched Series A deals. The largest single funding round in the space goes
to Blockchains $30.5M round led by Lightspeed Venture Partners and Wicklow Capital. BitPays $30M round from Index Ventures, AME Cloud Ventures, Felicis Ventures and Founders Fund among others came in a close
At the start of the year, Union Square Ventures took a look at
'Disaggregation of a Bank' startups. Three quarters later, those
companies have raised hundreds of millions in VC funding.
In January, Alexander Pease of Union Square Ventures released a
presentation titled Disaggregation of a Bank, highlighting a host of internet-enabled Fin Tech startups aiming to disrupt traditional financial services like
high net-worth wealth management, lending and merchant banking.
Obviously, there are many more tech startups focused on these areas of big
banks than Pease highlights, but nevertheless, we thought it would be
interesting to use CB Insights data to crunch the numbers behind his original
list of 31 bank busting startups. They provide a snapshot into what is
happening within the broader fin tech industry.
Nearly $600M invested in the last 4 quarters
Over the last four quarters, the bank disaggregation startups raised $590M
across 21 deals. Of note, startups on the list have raised $469M after Pease published his analysis on January 7. Each of the last four quarters have seen
$100M+ invested, with Q214 seeing the highest amount driven by large rounds to lending firms Prosper Marketplace and Lending Club.
Deal activity moves to mid-stage
Over the last eight quarters, just over 51% of deal activity to these select
startups came at the early-stage (seed/Series A). But YoY deal growth is
clearly moving to the mid-stage as highlighted by the visualization below.
Among the bank disaggregation startups that have raised mid-stage funding
in the last year are Coinbase, Auxmoney, CircleUp and TransferWise, the
UK-based money transfer startup rumored to be raising new funds from Sequoia Capital at a valuation near $1B.
Taking on banks requires capital (lots of it)
Among the list of startups, Square has raised the highest amount of capital at
over $490M, with its latest $150M raise coming from Singapores Sovereign Wealth Fund GIC in October. Six of the startups have raised over $100M
including Lending Club, Funding Circle, Stripe and Prosper. Payday loan
company Wonga is also among those startups but is reportedly in trouble
over its lending practices. Another 7 of the companies have raised over
$30M including Dwolla, BitPay and C2FO. All of the startups on the list that
have raised over $30M are below:
Perhaps not surprisingly, Union Square Ventures which is where Pease works, was invested in the highest number of companies (9) on the list
including Coinbase, SigFig and Funding Circle. A list of VC investors, outside
of USV, who have invested in four or more of the bank disaggregation
companies since 2009 is below.
After hitting a five-year high in 2013, payments tech deal activity
involving corporations is leveling out in 2014. A mix of tech, telco
and financial firms including Intel, MasterCard, Citi and Motorola
are some of the most active investors.
Over the past five years, private payments tech companies have drawn
massive investment to the tune of over $5B in the last five years. Interestingly, however, corporate investment into the sector is seeing a pull
After hitting a five-year high in 2013, payments tech deal activity involving
corporations is on pace for its lowest year since 2009 according to CB
Insights data. This report takes an in-depth look at corporate investments
into the payments tech space. Specifically, it looks at financing, stage,
geography trends into payments. All of the corporate investment data
analyzed is available as part of the CB Insights venture capital database.
2014 is a slower deal year
Since 2009, corporate investors have participated in over 140 deals totaling
$1.83B to payments tech companies. While deal activity looks to be down in
2014, corporations have invested in some notable deals including mobile
payments and marketing vendor Mozidos $185M financing (MasterCard) and iZettles $61M Series C (Intel Capital, SEB Venture Capital).
Corporate funding participation in payments tech peaked in 2012 with mega
deals including American Express $125M minority investment into China-based Lianlian Pay and Squares $200M Series D from corporates including Citi Ventures and Starbucks. Square subsequently took investment from
Singapores sovereign wealth fund.
Mid-stage takes 44% of corporate payments tech deals
Corporates typically jump into payments tech companies at the mid-stage,
with 44% of corporate investments coming at the Series B or Series C stage
since 2009. Some mid-stage corporate investments in 2014 include mobile
payments operator SumUps $13M Series C (Groupon, BBVA), payments processing app Flint Mobiles $9.4M Series C (Verizon Ventures) and B2B payments business TraxPays $15M Series B (Software AG, Commerzbank). Early-stage payments deals have taken 27% of corporate investments over
The chart below highlights the distribution of corporate deals by stage within
California tops NY for corporate payments tech deals by over 4x
Peeling back the US payments tech deals, we see California has taken 56% of
corporate investments since 2009 followed by New York and Massachusetts
which take 12% and 11% of deals, respectively. Other states seeing
corporate payments tech deals over the period include Texas, George and
Corporations investing in payments do nearly 30% of their deals outside the USA.
The most active corporates in payments tech
Intel Capital tops the list of investors by unique portfolio company
investments in the payments tech space since 2009 including iZettle,
Fortumo and mFoundry (acquired by FIS). A mix of payments strategics
including Visa, Citi, MasterCard and AmEx are making investments as are
tech corporations including Motorola Solutions VC and Qualcomm
Ventures. The diversity of the investors in the space underscores the
increasingly messy space that payments has become with everyone from
tech to telco to payments giants all attacking it.