When we first started Finovate in 2007/2008, during the depths of the financial-services sector collapse, there were maybe a half-dozen major venture fintech fundings per quarter. In comparison, yesterday (25 March), in a single day, 10 fintech fundings were announced totaling nearly $60 million (according to Crunchbase).
Yes, you read it right. TEN in 24 HOURS! And that doesn't even include ThreatMetrix, whose latest $20 mil round didn't make it into the database by today's noon (Eastern) cutoff.
What are the drivers? As you can see from the list below, the digital currency craze attracted nearly half the amount, with $23.5 million sent to three companies. Crowdfunding and other alt-lending has been absorbing large amounts of capital of late, and yesterday pulled in another $20 million in three fundings. The other four ran the gamut from $12 mil into a prepaid card company and $1+ million each in insurance, healthcare payments and stock analysis.
Is it 1999 again? That's not for me to say. I hope not (obviously). But it's hard to believe that there is enough revenue to sustain even a small portion of these startups. Clearly investors believe there are major disruptions ahead in all things financial.
Table: Fintech Fundings Announced March 25, 2014
|$17 mil||Circle Internet Financial||Digital currency/bitcoin|
|$14 mil||CircleUp||Equity-based crowdfunding|
|$12.2 mil||SpendSmart Payments Co||Prepaid cards for youth|
|$5 mil||Payward (Kraken)||Bitcoin|
|$4 mil||BlueVine||Small biz alt-lending|
|$1.6 mil||RealCrowd||Crowdfunding real estate|
|$1.4 mil||SeniorQuote Insurance||Insurance lead gen|
|$1.2 mil||FlexMinder||Healthcare payments|
|$1.2 mil||Estimize||Earnings estimates for stocks|
Source: Crunchbase, 26 March 2014