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Research Brief Page

Bitcoin Startup Investment Continues to Hit New Records

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Disaggregation of a Bank – Startups Raise Nearly $600M in the

Last Year

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Corporate Investment Activity into Payments Tech is Slowing

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10 UK Fin Tech Startups to Watch

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Intuit Has Become One of Tech’s Most Active Acquirers

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Payments Tech Investment Report

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Where Is the Smart VC Money Going in Fin Tech?

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Unlike MasterCard & Visa, American Express Looks Far Beyond

Payments for Venture Investments

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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

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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 hasn’t 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. It’s a far cry from Q2 2013, when total funding was under $25M and

there were more investors than investor-backed startups in the bitcoin

ecosystem.

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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

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tranched Series A deals. The largest single funding round in the space goes

to Blockchain’s $30.5M round led by Lightspeed Venture Partners and

Wicklow Capital. BitPay‘s $30M round from Index Ventures, AME Cloud

Ventures, Felicis Ventures and Founders Fund among others came in a close

second.

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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 Q2’14 seeing the highest amount driven by large

rounds to lending firms Prosper Marketplace and Lending Club.

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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 Singapore’s 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:

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Top Investors

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.

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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

back.

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 Mozido‘s $185M financing (MasterCard)

and iZettle‘s $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 Square‘s $200M Series D from corporates including

Citi Ventures and Starbucks. Square subsequently took investment from

Singapore’s sovereign wealth fund.

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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 SumUp‘s $13M Series C (Groupon, BBVA), payments

processing app Flint Mobile‘s $9.4M Series C (Verizon Ventures) and B2B

payments business TraxPay‘s $15M Series B (Software AG, Commerzbank).

Early-stage payments deals have taken 27% of corporate investments over

the period.

The chart below highlights the distribution of corporate deals by stage within

payments tech.

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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

Colorado.

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.

A list of corporate investors with 3+ payments company investments since

2010 are given below:

Intel Capital

Google Ventures

eBay (PayPal)

MasterCard Worldwide

American Express

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Visa

Qualcomm Ventures

SK Telecom Ventures

SingTel Innov8

Motorola Solutions Venture Capital

Note: Both corporations making direct investments in startups as well as those investing out of separately delineated corporate venture units were

included in the dataset.

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Which Fin Tech companies in the UK are picking up steam?

The UK fintech scene is hot right now, with more than $450M having been

invested in 2014 alone. We decided to use CB Insights data to pick a few

up-and-coming startups that are worth keeping an eye on. These startups

are pre-Series C companies that have received funding within the last year.

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Intuit has acquired more companies in 2014 than any of the past 5

years. We analyze their acquisition activity, industry focus, and

geographic areas of focus.

Intuit’s inclusion on our Periodic Table of Tech surprised some folks so we

dug into the data a bit. But as our ranking of top tech acquirers highlighted,

the firm has been on an acquisition tear over the past two years having done

more acquisitions since 2013 than the previous 5 years combined. Intuit’s

CEO recently stated that their increased acquisitions are a step towards the

company’s mission “To be the operating system behind small business

success…”.

We used CB Insights’ Acquirer Analytics to analyze the small business

software company’s increased M&A deal activity.

The data below.

2014 already breaks acquisition highs for Intuit

After 9 acquisitions from 2008-2012, Intuit acquired 6 companies in 2013, and has acquired 8 thus far in 2014, the highest single-year tally in the past

10 years. The largest transaction for Intuit thus far this year came in the

form of a $360M acquisition of Check, a mobile bill pay company. This is the

second largest reported acquisition for Intuit since 2008, with the 2012

$423.5M deal to acquire Demandforce holding the top spot.

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Intuit acquires within its core business

Since 2008 Internet Accounting and Finance has seen the most acquisitions

of any sub-industry with 4, with Billing, Expense Management, and

Procurement trailing by one. Of note, all 3 acquisitions in the Billing space

(Invitco, Lettuce, Prestwick Services) have come in 2014, supporting the

CEO’s strategic intent to make Intuit the small businesses operating system.

Of the 4 Accounting and Finance acquisitions, 3 have come since 2013.

PaySuite is the most recent, as the UK-based online payroll services

company was acquired in August 2014 in order to bolster QuickBooks

Online’s international presence. KDK Softwares and GoodApril, the first

company acquired pre-demo day out of Techstars, were Intuit’s other two

transactions in the space since 2013. See below for all sub-industries with

multiple acquisitions since 2008.

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Intuit goes international in 2014

Intuit has acquired over 10 California-based companies since 2008, including 8 since 2013. Massachusetts and Washington have each seen a pair of

acquisitions in the same time period, while Illinois (itDuzzit) and North

Carolina (MedFusion) rounded out the US acquisitions. On an international

level, India, the United Kingdom, and Australia each have seen an acquisition

in 2014.

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An in-depth look at the state of payments tech and major

financing trends, investors, companies and exit activity in the

industry.

From peer-to-peer payments platforms to point-of-sale systems to

subscription accounting and billing services to cloud-based payment fraud

detection services, investors are actively targeting various issues within

payments. Investors have funded emerging private payments companies to

the tune of over $5 billion in the past five years.

This analysis provides an in-depth look at the payments tech financing

landscape as well as the investors and companies fueling the payments

startup ecosystem.

Specifically, it covers:

Financing Trends By Stage

Payments Tech Geographic Hubs

The Most Well-Funded Payments Tech Startups

Payments Most Active Investors

Exit Activity

As the graph below highlights, deal activity to the funding space has

consistently grown over the last 5 years. With almost 230 deals last year,

the space saw deals climb 8% from 2012 and 171% since 2009.

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The quarterly funding activity chart shows the general growth in deal activity and the influence of large deals on the overall funding tallies. Q1 2014 was a

breakout quarter for payments tech with almost $700M in venture financing,

owing to a few notable deals including Stockholm-based Klarna, which has

seen heavy investment from Sequoia Capital, and which raised €90M

($121M) in a growth equity round and Stripe, which raised $80M in Series C

funding at a valuation of $1.75B.

Payments Tech Financing by Stage

Some clear trends in payments tech funding by stage have developed since

2009, most notably an increase in early-stage funding as Seed and Series A

deals took almost 41% of all funding in 2013 up from just 16% five years ago.

Higher levels of early-stage funding indicate investor bullishness on the

segment. For corporate innovation groups, these are the emerging payments

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disruptors and technologies to be mindful of. Early-stage financing has mostly

taken share from Series D and later rounds, which have shrunk from over

50% of funding dollars in 2009 to 22% last year.

The sharp spike in 2011 Series C funding is attributable to $100M+ funding

rounds by algorithmic cash-lender Wonga and mobile payments provider

Square. In its Series C round, Square raised money from the likes of Kleiner Perkins, Khosla Ventures, Tiger Global, and Richard Branson and was valued

at $1.6B. In it’s most recent secondary transaction from investors including

Rizvi Traverse, Square raised funding at a $5B valuation. It is feasible the

company’s valuation has likely slipped given its woes on both the business

model and product fronts (see Square’s poor mobile app performance)

In line with funding growth, early-stage deals have increased significantly to

comprise 75% of deals last year compared to 50% in 2009. The increase was

brought about by dramatic growth in seed-stage deal activity which rose to

46% in 2013, in spite of slightly declining Series A activity.

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Payments Tech Geographic Hubs

Not surprisingly, California led US states in payments tech deals by a wide

margin, with 245 deals since 2009 yielding almost $2.2B in investor backing.

Some of the state’s most well-funded payments companies include Square,

Obopay, Yodlee, Zuora, and Stripe. For comparison, New York and

Massachusetts together saw 112 deals in the same period.

The United Kingdom and India follow the United States in payments tech

deals, although US-based companies held the vast majority of deals in the

industry.

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The Most Well-Funded Payments Tech Startups

Square, a POS solutions provider based in San Francisco, has raised almost

$350M in venture capital to date and is one of the most well-funded

companies in the space.

Stockholm-based Klarna specializes in payment solutions for ecommerce,

and has raised almost $300M in venture capital. Klarna has enjoyed

extensive investment by VC giant Sequoia Capital, which has participated in

the company’s Series A round in 2010 and all three of its growth equity

raises since. It is worth tracking Sequoia Capital btw (Sequoia Capital

teardown and Smart Money Fin Tech trends)

Rounding out the top three companies on our list, algorithmic cash lender

Wonga has raised over $145 in venture capital from some major investors,

including Accel Partners, Oak Investment Partners, and Greylock Partners.

Five of the companies below, including Wonga (London-based), are based

outside the United States.

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Investor League Tables

500 Startups leads investors in payments tech companies having invested in

14 companies in the industry since 2009. Some of 500 Startups’ investments

include Recurly, peerTransfer, and PayClip.

Other widely-known VCs Accel Partners and Andreessen Horowitz top our

list, investing in twelve payments companies each. Intel Capital is the only

corporate venture arm to appear on the list below.

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Early-Stage Investors

Not surprisingly, 500 Startups also tops the list of early-stage payments tech

investors, as all 14 of its investments in the industry were at the seed stage.

SV Angel and Accel Partners tied for second-most investments in the

payments space. It’s interesting to note that had incubators been included, Y

Combinator would also have ranked #2 on the list below.

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Mid-Stage Investors

Balderton Capital, the European division of Benchmark Capital until 2007,

has been the most active investor in mid-stage payments companies. The

London-based VC has invested in several startups in the payments industry

since 2009, including Wonga, LevelUp, and EWise.

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Late-Stage Investors

Sequoia Capital, DAG Ventures, FTV Capital, Doll Capital Management, and

TTV Capital led investment in late-stage payments tech among VCs. With

the exception of TTV, all are based in California.

Exit Activity

The payments tech industry saw a decline to about 50 exits last year, down

from a peak of 69 exits in 2012. Acquisitions make up the vast majority of

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exit activity within the industry. Notable industry exits include Braintree,

which provides ecommerce payments platforms and was acquired by eBay’s

Paypal business unit last year for $800M and Xoom Corporation, an instant

money transfer service that IPO’d.

eBay/PayPal have been the top acquirer of payments tech companies in the

past several years, buying six companies since 2009. Google, American Express, and Intuit also bought several companies in that time. The diversity

of acquirers underscores the players, both new and old, attacking the

payments space.

Notes:

This analysis includes private company investments in the payments tech industry by venture capital firms, corporations, corporate venture investors,

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hedge funds/mutual funds, angels, incubators and accelerators. Debt, grants

and lines of credit were not considered in this dataset.

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Fin Tech deal activity by 12 top VC firms ranging from Sequoia

Capital to Andreessen Horowitz has grown 61% from 2010 to

2013.

If trying to understand the emerging business models, technologies and

disruption in Fin Tech, one of the smart ways we are seeing financial

services firms do this is by following deals and investor money flowing into

Fin Tech companies. But instead of tracking all investors, let’s follow the

smart VC money since as we all know, not all VCs are created equal.

And within the Fin Tech universe today, the smart money VCs are investing

in technologies ranging from peer-to-peer loan marketplaces to mobile

payments to big data tools for capital markets.

As new innovation rapidly makes its way through the financial services

sector, Fin Tech investments across the entire ecosystem have exploded in

recent years. Of note, a recent report released by Accenture and the New

York City Investment Fund using CB Insights data found global Fin Tech

investments reached nearly $3B in 2013 from under $930M in 2008.

This research brief highlights the Fin Tech investment activity of 12 of the

top venture firms as identified by our tech unicorn VC analysis. The VC

firms whose Fin Tech investments are analyzed include:

1. Accel Partners 2. Andreessen Horowitz

3. Battery Ventures

4. Benchmark Capital

5. Bessemer Venture Partners

6. CRV

7. Greylock Partners

8. Kleiner Perkins Caufield & Byers

9. New Enterprise Associates

10. Redpoint Ventures

11. Sequoia Capital

12. Union Square Ventures

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The data below.

2014 will be a record year for smart VC investment in Fin Tech

Looking at deal activity within the Fin Tech market since 2007 by these 12

VC firms, we see a significant surge in deal activity since 2009. In fact, total

Fin Tech deals by the 12 firms in 2013 grew 61% compared to 2010 and a

notable 309% compared to 2009. The growth in Fin Tech deals accounts for

both new investments as well as follow-on bets to Fin Tech startups ranging from Stripe to Wonga to Betterment to Level Money.

Which areas within Fin Tech are top VCs bullish on?

Using the CB Insights’ Business Social Graph, we visualized the universe of Fin Tech companies that the 12 VC firms have invested in since 2007 and

find hundreds of deals within Fin Tech that the top firms have participated

in.

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While Fin Tech investments span a diverse array of companies ranging from

payments to asset management to personal financial management, there

appear to be several themes that these brand-name venture firms see

opportunities in. When we use the Business Social Graph inputs and cluster

companies by focus area, four markets emerge as being consistent areas of

focus among the top 12 venture firms. These include

Lending

Personal finance management

Payments technology

Bitcoin

With hundreds of investments, there are many fledgling as well as many

more established private companies on the list. Some of the startups which

feature investment from multiple investors include Square (backed by

Sequoia and Kleiner Perkins), Boku (Benchmark, NEA, A16Z), Stripe

(Sequoia, Redpoint, A16Z), Coinbase (A16Z, Union Square Ventures) and

Funding Circle (Accel, Union Square Ventures).

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As financial services institutions increasingly begin to monitor the changing

landscape before them, following the smart money is perhaps one of the

best ways to understand the trends they should stay ahead of and the

companies they may want to watch from a competitive, acquisition,

partnership or procurement perspective.

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MasterCard and Visa made more than 60% of their investments in

payments since 2009. American Express, on the other hand, saw

payments take just 27% of its deals.

Visa, MasterCard, and American Express are the largest payment networks

in the US (Discover is a distant 4th). As the payments space sees tech

innovation ramp up, the three firms have actively taken to strategically

investing in startups. Over the past four quarters, the three have

participated in 14 deals representing $165M in aggregate funding. On a deal

basis, the triumvirate have done 27% more deals YoY.

No surprise – Payments investments dominate

Nearly 40% of all deals made over the last five years by AmEx, Visa and

MasterCard went to payments tech companies as one might expect. More

interesting are investment forays by the payments giants into areas like eCommerce apparel & accessories business intelligence and advertising, sales

and marketing tech (more on that below).

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American Express goes off the beaten path

When we break down the sub-industry level investments by each company,

it is clear that American Express is most heavily investing outside its core

payments business. While MasterCard and Visa each made 60% or more of

their investments in payments over the period, AmEx’s payments

investments accounted for just 27% of their total deals.

Some of American Express’ largest investments have, in fact, been in areas

quite removed from payments. In February 2013 AmEx participated in the

$41.5M Series B round for custom glasses maker, Warby Parker. Then, in

July, they invested in a $53M Series C round for Fancy, a social shopping and blogging platform to list products. Both Warby Parker and Fancy would

seem to be aligned with AmEx’s affluent, high value cardmember base, but of

course, it’d be fair to ask why AmEx felt the need to invest in either

company at all esp in late-stage rounds with lofty private market

valuations? Fancy, a Pinterest competitor, was valued at a rumored $600

million in the round AmEx invested in.

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Motivations and strategy aside, it is clear that American Express has bought

into its venture strategy more than its competitive peers. The NYC-based

payments behemoth has in 19 deals in the last 2 years versus Visa and

Mastercard which have combined for a total of 6 deals. Whether American

Express’ strategy of actively investing in companies far afield from its core

business proves prescient or ill-advised remains to be seen.

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In addition to traditional VCs, mobile point-of-sale startups are

seeing investment from the likes of eBay, Mastercard, Starbucks

and Verizon to name a few. In other words, the payments

landscape continues to get messier.

Mobile PoS startups which enable merchants to conduct transactions and

sometimes manage their businesses through mobile devices such as

smartphones and tablets have raised $340M across 34 deals in the last 4

quarters. Deal growth at the seed and Series B stages suggests increased

competition at the early stage and a healthy follow-on investment market for

those with early traction.

Overall, deal activity has remained flat YoY and funding was actually down

7.5% as a result of the Q3 2012 $200m series D financing for Square, led by

Citi Ventures, Rizvi Traverse Management, and Starbucks.

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Series B Leads Funding Growth

The sector saw series B financings soar 200% YoY with the likes of iZettle,

Vend and Flint Mobile getting funded. In the same time period, seed-stage

financings grew 80% YoY. The mobile PoS space remains in its early days as

evidenced by the fact that 95% of deals are occurring in Series B or

prior. Interestingly, when companies get past the Series B, the round sizes

step up materially as evidenced by the average and median deal sizes below in the hundreds of millions of dollars.\

Corporate Investors Active in Mobile PoS Investing

Over the past two years, a diverse array of corporate investors have been

actively investing in mobile PoS companies. Notable corporate investors

include Ebay, Starbucks, Verizon Ventures, Citi Ventures, Mastercard, and

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American Express Ventures. The diversity of the players is notable. While

the expected credit card companies and payment networks are represented,

there are also telecoms, tech and retail companies all attacking the

space. As we’ve highlighted before, the payments landscape is becoming

increasingly messy and the mobile PoS investors underscore that.

21% of deals in the last year have involved corporations. Some of the notable mobile PoS deals in which they’ve participated include:

Square (Citi Ventures, Starbucks Corporation) - Facilitates

transactions between buyers and sellers with its free credit card reader,

while also using Square Register to serve as a full point-of-sale system for

businesses.

iZettle (American Express Ventures, Mastercard Worldwide) –

Provides a free mobile app and mini chip-card reader that lets anyone make

or take payments anytime, anywhere.

SumUp (American Express Ventures) – Provides merchants with a

free card reader connected to a mobile device and an app to enter the

amount to be transferred.

Flint Mobile (Verizon Ventures) – Develops an app that enables users

to process payments using only their phone without any additional card

readers or dongles, through patented technology.

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Accenture's new report 'The Boom in Global Fin Tech Investment' highlights

that global fin tech financing has tripled over the past five years with UK and

Ireland-based companies taking the lion's share of Europe's Fin Tech deals.

Global investment in financial technology or ‘Fin Tech’ has more than tripled

during the last five years. And among the growing global centers of Fin Tech

investments is the U.K. and, more specifically, London.

Those are among the many highlights of Accenture’s new report ‘The Boom

in Global Fin Tech Investment: A new growth opportunity in London’. Using

CB Insights’ data, the report offers insightful commentary and analysis

around Fin Tech’s growth trajectory and the emergence and opportunities

of London as Europe’s Fin Tech capital. Below are some highlights in the

Accenture report. The entire 16-page report can be downloaded for free by

logging into CB Insights and visiting the Research tab. If you don’t have an

account, you can create one for free here.

Global Fin Tech investments hit $3B in 2013

With innovation enabled by new consumer behaviors, technology and

regulations, 2013 saw private Fin Tech companies raise nearly $3 billion –

more than tripling the $930M invested globally in Fin Tech in 2008.

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The rise of London as Europe’s Fin Tech hub

Accenture’s analysis of European fin tech data reveals that since 2004 the

lion’s share of Europe’s Fin Tech deals and financing have taken place in UK

and primarily London. In 2013, UK and Ireland represented more than half

(53%) of Europe’s Fin Tech deals and more than two-thirds of Europe’s Fin

tech funding (69%).

Silicon Valley dominates Fin Tech investments globally

While London may be Europe’s Fin Tech capital, its share of global Fin Tech

financing is still relatively small, according to the Accenture report. In 2013,

nearly 1 of every 3 Fin Tech dollars and 1 of every 5 deals went to Silicon

Valley-based companies. Europe, meanwhile, accounted for 13% of all Fin

Tech funding globally in 2013 and 15% of deals. However as the chart below

highlights, London’s five-year growth trajectory in Fin Tech investments has

outpaced Silicon Valley.

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While demand for both crowdfunding and P2P lending platforms has grown,

funding dollars have primarily accrued to a small group of well-funded P2P

lending platforms including Lending Club, Prosper Marketplace and Funding

Circle.

Betaworks’ unveiling of its new Alphaworks investment platform this week

was the latest effort bolstering crowdfunding as a legitimate and even

mainstream alternative for financing. Of course, crowdfunding also has well-

known players like Kickstarter and Indiegogo as well.

Venture capital investors are playing a big role in the rise of alternative

financial services – putting funding dollars toward both crowdfunding (equity,

donation, reward etc.) as well as peer-to-peer lending platforms, matching

individual borrowers and unrelated lenders or “peers.”

Demand for both crowdfunding and P2P lending platforms has grown but as

the chart below highlights, P2P lending platforms have raised nearly $715M

vs. $237M to crowdfunding platforms since 2009.

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The most well-funded P2P lending company is Lending Club, which counts

investors including Norwest Venture Partners, Canaan Partners and Union

Square Ventures and is currently valued at $3.8B and is a Tech IPO Pipeline

company. Chinese P2P lending company Renrendai announced a mega

$130M round led by Trustbridge Partners in January. Other P2P lending

startups that have raised $25M+ just since 2009 include UK-based Funding

Circle, Benchmark Capital-backed Prosper Marketplace and Zopa, which

raised a $25M round from hedge fund Arrowgrass Capital Partners last

month.

There have been some notable VC financings in the crowdfunding space. Just

last month, online crowdfunding platform Indiegogo raised a notable $40M round from investors including Kleiner Perkins Caufield & Byers and

Institutional Venture Partners. Equity crowdfunding platform Angellist

raised $24M last year at a rumored $150M valuation.

Interestingly, Union Square Ventures-backed KickStarter is among the most

prominent crowdfunding platforms but last raised funding 48 months ago so

will be one to watch in the coming months.