Fintech funding: Mega rounds increase 50% QoQ

Global fintech funding dropped marginally in the third quarter sequentially, but deals worth more than $100 million substantially increased as funding remained below 2019 levels. As global fintech funding reached $7.4 billion in Q3, it was down 46% year over year, according to CB Insights ’ State of Fintech Q3 report published last month. [caption id="attachment_220152" align="alignright" width="300"] Image by CanStock [/caption] “While fintech funding showed signs of stabilizing in Q3 2023, on a quarterly level, fintech funding is still below 2019 levels,” Elif Yayla , senior fintech analyst at CB Insights, told Bank Automation News . “Looking at [year-to-date] dollars, at $30.5 billion, fintech funding is at less than half the amount raised all of last year.” While funding remained low, mega-rounds — those worth more than $100 million, which accounted for 33% of all funding — saw a 50% increase sequentially to $2.4 billion, which “supported the stabilization of fintech funding last quarter,” Yayla said. Macro weighing heavy on fintechs Uncertainty about the economy, interest rate hikes and the aftermath of bank failures continue to weigh on parts of the venture capital system, Michael Gastauer , founder and chief executive of digital bank Black Banx , told BAN . “Macroeconomic conditions are affecting primarily late-stage companies in their ability to go public or raise funds through VC investments,” Gastauer said. “Seed and early-stage companies are not that heavily affected.” Many companies have shelved IPO plans in the face of harsh macroeconomic conditions, and late-stage companies that raised money are seeing a drop in their valuations, Gastauer said. For example, spend management platform Ramp raised $300 million in a series C round in August at a valuation of $5.1 billion, down from a valuation of $8.1 billion in 2022. “The past year of high-interest rates has changed the game for startups,” Luis Silva , CEO of Brazilian payment fintech CloudWalk , told BAN . “In 2024, companies that aren’t profitable or close to being cash-positive will have a high likelihood of failure.” Despite low fintech funding compared to the same time last year, the following companies have contributed to the stabilizing state of fintech funding: QI Tech raises $200M Brazilian BaaS provider QI Tech raised $200 million in a series B round led by New York-based venture capital company General Atlantic , according to General Atlantic’s Oct. 31 release. QI Tech aims to use the money for mergers and acquisitions, enhancing client experience and hiring, Marcelo Bentivoglio , chief financial officer and co-founder at QI Tech, told BAN . The Sao Paulo-based company provides a one-stop shop, covering everything from user onboarding and background checks to credit selling in the financial markets, white label banking and credit emission and score analysis to its customers, Bentivoglio said. The company has raised $248 million since its inception in 2018, according to Crunchbase . Arteria AI raises $30M in series B round Digital documents analysis company Arteria AI raised $30 million in a series B round led by GGV Capital U.S., Citi and BDC Capital , according to the company’s Oct. 26 release. Arteria plans to use the funding to further its growth. The company has been hiring employees from Goldman Sachs, State Street and Deutsche Bank to elevate business operations, co-founder and CEO Shelby Austin told BAN . The Toronto-based company also aims to “invest in our research to create highly relevant models for our customers, and ensure our product continues to have the functionality to solve the most important problems for our clients,” Austin said. The company has customers in Canada, the United States and the United Kingdom and plans to deepen its footprint in these markets, Austin said. Arteria AI has raised $50 million since its inception in 2020, with Citi being a prominent investor and customer, Austin said. Volante raises $66M from Sixth Street Group Cloud payment service provider Volante Technologies raised $66 million in debt and equity financing from Sixth Street Growth , according to Volante’s Nov. 7 release. “This latest investment will further accelerate our customer product roadmap, particularly in global and domestic real-time or instant payments, FedNow Instant Payments, U.K. New Payments Architecture and domestic and cross-border ISO 20022 modernization,” a Volante spokesperson told BAN . The money will also allow help the company expand its payments-as-a-service offering into the mid-tier bank segment, especially in the U.S. and Europe, where FedNow Instant Payments, The Clearing House RTP and SEPA Instant Payments are driving the adoption of modern payments technology, the spokesperson said. The company has raised equity and debt combined of $116 million since its 2001 inception, the spokesperson said. Volante will also consider strategic geographical expansion opportunities aligned with a regional appetite for payments modernization and cloud payments adoption,” the spokesperson said. The company is looking to add pay-by-bank capabilities to its product suite, the spokesperson said. Citi, BNY Mellon , Goldman Sachs and Wells Fargo use Volante’s technology, according to the company’s website. 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.

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