As the global economy faced macroeconomic headwinds coupled with rising rates, fintech funding in 2023 remained subdued compared to prior years. 

Global fintech funding stood at $30.5 billion year to date, down 60% year over year, while the number of deals fell by 51% YoY to 2,849, according to market intelligence company CB Insights’ third quarter report, published in October. Deal sizes also took a hit, with the average at $14.1 million, down 17% YoY, while mega funding rounds — of $100 million or more — decreased by 33% YoY to $2.4 billion.

“On a quarterly level [in Q3], fintech funding is still below 2019 levels,” Elif Yayla, senior fintech analyst at CB Insights, told Bank Automation News. “What we’re seeing this year is far more than a simple reversion to the pre-pandemic norm or a rebound — at this rate, total fintech funding this year will be well under 2019 levels.” 

In 2019, global fintech funding stood at $77 billion, the report states. 

But deals are still happening, Katya Chupryna, head of fintech strategic investments at Citibank, said at Finovate Fall in September. 

“It’s probably the best time because good companies are still good companies,” Chupryna said. “A lot of them are improving, there is much less noise, so you can really segregate who is and has the potential to really win.” 

Here are recent fintech deals: 

Fintech venture fund Canapi raises $750M 

Canapi Ventures raised $750 million in its Canapi Fund II to invest in fintech and financial services companies, according to the company’s Dec. 7 release. 

That brings Canapi’s assets under management to $1.4 billion, the release stated. The VC said its Canapi Fund I invested in: 

• Anti-fraud fintech Alloy; 
• Financial compliance fintech Thoropass; 
• Conversational AI company Posh; and  
• Digital banking service provider for teens and kids Greenlight. 

“Our venture capital model connects high-quality fintech companies to our extensive network of banks and strategic partners, creating strong symbiotic value in this important ecosystem,” Canapi Managing Partner Gene Ludwig said in the release.  

FIs that back Canapi Ventures include American Bankers Association, Truist Bank and Fifth Third Bank, according to the company’s website. 

Vestwell raises $125M 

Retirement financial planning platform Vestwell raised $125 million in a series D funding round that closed today. 

Lightspeed Venture Partners led the round and noted in a Dec. 21 release that New York-based Vestwell’s cloud-based API solution puts it in a good position to work with large financial institutions along with serving the small- and medium-business marketplace, which has been underserved in the past. 

Vestwell’s real-time recordkeeping, offerings of bundled or unbundled solutions, and white label solution capabilities will help it serve the $35 trillion retirement and benefits market, the release stated. 

More than 1.2 million customers and 50,000 businesses use Vestwell’s solution. Clients include Royal Bank of Canada and automated finance solutions company Ramp, according to the Vestwell website. 

Since its inception in 2016, Vestwell has raised $237 million, with Goldman Sachs being a prominent investor, according to Crunchbase. 

Koho gets $64M in series D 

Canadian digital banking fintech Koho Financial has raised CA$86 million ($64 million) in a series D funding round led by Drive Capital, Eldridge Industries and BDC, according to the company’s Dec. 7 release. 

The Toronto-based company offers a digital-first, full-service spending and savings account along with spending insights, credit score builder and savings goals, according to its website. 

The money will be used to improve the user experience, founder and Chief Executive Daniel Eberhard said in the release. “In this economic climate, every dollar counts. This injection puts us in a position to ship faster and push harder for Canadians.” 

Since its inception in 2014, Koho has raised $407 million, with Mastercard being a prominent investor, according to Crunchbase.  

Valid8 nabs $8.5 million 

AI-powered forensic accounting solution provider Valid8 Financial raised $8.5 million in a series A funding round that closed Nov. 20. Austin, Texas-based venture capital firm Silverton Partners led the round.  

The company’s solution uses AI to provide forensic accounting services that quickly analyze complex financial transactions and produce courtroom-ready evidence for litigators, Chief Executive Chris McCall told BAN, adding that the technology can reduce tedious manual work typically required in fraud investigations and prosecutions. 

“Traditional processes require months [where] professionals spend up to 90% of that time performing painstaking reviews and data cleanup while only covering a small fraction of financial transactions,” McCall said. “With Valid8, accountants, lawyers and investigators can review the complete financial picture in just hours.” 

Valid8 uses natural language processing, visualization tools, OCR and other AI technologies to ingest large volumes of financial data, including bank and brokerage statements, Bitcoin deposits and withdrawals, and hand-written checks, McCall said. The technology then reconciles, categorizes and traces the flow of money to deliver reports in just hours, McCall said. 

“The platform does not make any judgments about potential fraud,” he said. “Instead, it highlights transactions requiring further evaluation by a professional investigator.” 

Since its 2016 inception, Valid8 has scanned more than 400 million transactions and helped solve 20,000 cases, McCall said. 

Valid8 plans to use the money from the round to build out the team, primarily its Boulder, Colo., headquarters, McCall said. Accounting and legal firms including Baker Tilly, Frank Sims & Stolper and Kaufman Rossin are Valid8 clients, he said. 

Get ready for the Bank Automation Summit U.S. 2024 in Nashville on March 18-19! Discover the latest advancements in AI and automation in banking. Register now.