INSIDE THE DEAL
The 10 biggest fintech deals of December
By Robert Scammell
The fintech industry ended 2021 on a high note, with players in the ecosystem securing billions of dollars in funding deals in December.
The fintech industry went from strength to strength last year, with companies in the sector raking in multi-million deals throughout.
Data from GlobalData’s Technology Intelligence Centre shows that there were 2,319 deals worth a total of $84.7bn in 2021 in the financial services industry, up from 1,449 deals worth $17.85bn in 2015.
The growth of the sector continued in December with several fintech companies closing massive deals, according to GlobalData's market intelligence. By taking a closer look at the 10 biggest fintech deals closed in the last month of 2021, we can gain insights as to the likely market trajectory in 2022.
Integrity Marketing Group snaps up $1.2bn to boost insurtech platform
Integrity Marketing Group rounded off the year by raising the biggest fintech funding deal in December. The US-based life and health insurance distributor raised $1.2bn to accelerate the growth of its insurtech platform. Private equity firm Silver Lake led the round.
"This is a revolutionary partnership that will greatly enhance our mission to help Americans prepare for the good days ahead," said Bryan W. Adams, co-founder and CEO of Integrity.
While the size of the round is big news in itself, it's also a sign of how the insurtech industry has evolved over the past few years.
There's nothing like bad things happening to make demand for insurance skyrocket. And if there is one thing the last two years have had no shortage of, it's bad news. The coronavirus has so far caused over 5.4 million deaths worldwide among the 293 million cases recorded. The global health crisis has also been a contributing factor to chip shortages, rising unemployment and other negative impacts on society.
No wonder then that the insurtech sector – a subset of the fintech industry – has come out as one of the clear winners of the Covid-19 pandemic. Despite investor hesitation in the first quarters of 2020, insurtech startups have spent the past two years raking in millions of dollars in deals.
GlobalData’s Technology Intelligence Centre recorded 225 venture financing, private equity, debt offering and equity offering deals in the insurance industry worth a total of $11.2bn in 2020. In 2021, the number of deals in the insurance industry jumped jumped to 282, raising $7.9bn in total.
Bigger players like Lemonade and Root Insurance have enjoyed successful public debuts over the last year. The industry is expected to grow further in the years to come.
“The digitalisation that goes hand in hand with the insurtech theme will be more essential than ever in a post-pandemic world so it will continue to thrive,” analysts wrote in a recent GlobalData thematic research report on the insurtech industry.
Integrity's funding round indicates that investors agree.
Anthemis Group raises $700m to fund future fintech deals
Anthemis Group is not a fintech company, but the investor is still one of the most well-known players in the industry. The company has invested in over 150 fintech startups over the years. That includes Betterment, eToro, Curren0cy Cloud, The Climate Corporation, Carta and Happy Money.
So when news broke in December that the investment platform had secured another $700m for its funds, it's hardly surprising that fintech wonks paid attention.
“Anthemis’ first 10 years were focused on proving our thesis-driven approach, building out our platform and launching our Asset Management Business," said Amy Nauiokas, co-chair of the board at Anthemis.
"Given this great success and momentum, Anthemis Group is poised to lead and innovate the next wave of change within the industry. Fintech’s continuous evolution requires us to support companies at more levels of their growth as the market continues to reach new heights and to continue to innovate in how we do so.
"With these closes and our recent SPAC announcement, we are committed to supporting fintech companies across their life cycle. I am excited to dive further into growing our already incredible portfolio, and have ultimate trust in Bri to lead us in the next phase of our growth as we continue to lead the work in fixing what is broken in our financial system.”
In other words, expect to see Anthemis' name in more fintech deals in 2022.
Monzo Bank secures $500m
Things finally seem to be looking up for UK challenger bank Monzo. The digital lender achieved a valuation of $4.5bn following a $500m funding round in December. The news comes after two years of setbacks for the neobank.
Monzo was poised to have a great year in the 2020. Then-CEO Tom Blomfield was on the cover of Wired, its expansion to the US was underway and the startup had achieved a $2bn valuation. Flashing a coral-coloured Monzo card had become a sure-fire way for tech geeks to prove they had a finger on the pulse of the sector.
Then Covid-19 hit. Over the following months the neobank had to slash hundreds of jobs, the leadership said it would refrain from taking salaries and its losses widened to £130m in 2020. In the summer of 2020, it closed a $60m downround that saw its valuation drop by 40% to $1.24bn.
Blomfield himself left Monzo in January 2021, citing mental health issues. He has since started to make a name for himself as an angel investor, having injected dosh into startups like dating app Thursday and discussing bad behaviour from other investors – for instance claiming that a SoftBank representative spent a meeting picking his toes.
TS Anil, who had been hired as the company's US CEO, took over the CEO role. In October 2021, the company also withdrew its application for a US banking licence.
However, Anil seems to be optimistic about Monzo's ability to recover, following the $500m funding round in December.
“This round comes off the back of a fantastic year for Monzo," says Anil. "We’ve seen record revenues, launched new products and tools, and continued to top the charts for our services. We’ve hired some incredible talent."
Abu Dhabi Growth Fund led the round. New investors Coatue and Alpha Wave Ventures and existing shareholders Accel and Goodwater also participated in the raise.
Razorpay secures $375m in Series F deal
Razorpay is one of the big fintech success stories to come out of India. Over the years it has made a name for itself as a digital payments provider.
And it plans to get bigger after securing a $375m Series F venture funding round led by Lone Pine Capital, Alkeon Capital and TCV, with participation from Tiger Global, Sequoia Capital India, GIC and Y Combinator. Razorpay now has a valuation of $7.5bn.
The news came as the adoption of digital services in India accelerated amid Covid-19 lockdowns, and increasing interest from investors. This has led to more that 45 tech companies having been named unicorns in India, with a collective valuation of $138bn billion as of November 2021, according to GlobalData.
Researchers are expecting that it's only a question of time before more Indian startups can claim membership in the coveted unicorn club.
The growth of the Indian ecommerce industry and Razorpay's latest funding deal certainly seem to point towards some of those future unicorns being fintech companies.
Anchorage Digital raises $350m in Series D fintech deal
2021 was a big year for cryptocurrency news. The year saw Bitcoin become an official legal tender in El Salvador and continue its rollercoaster journey, reaching an all-time high of $68,990.
The last 12 months also saw countries like China introduce outright bans against blockchain-based digital currency and other nations like the US are seemingly on the cusp of introducing – if not stricter then at least clearer – new rules.
Then, of course, there's the rise of non-fungible tokens (NFTs), wild fluctuations across lesser-known cryptocurrencies like Dogecoin and Floki, and speculations as to when Diem, Facebook’s rebranded cryptocurrency Libra, will finally launch.
Despite the uncertainty of the market, investors are flocking to the sector. This is evident from Coinbase's public float in April as well as from the fact that companies like Revolut and PayPal have introduced services enabling clients to trade with cryptocurrencies.
No wonder several of the experts Verdict spoke with at the end of 2021 predicted that the market will continue to grow in 2022.
Anchorage Digital raising a $350m Series D funding round in December suggests that they may be on to something. The company provides a platform that enables companies to trade with digital assets.
Global investment firm KKR led the fintech deal, which valued Anchorage at over $3bn. Participants include Goldman Sachs, Alameda Research, Andreessen Horowitz, Apollo credit funds, Blockchain Capital, Delta Blockchain Fund, Elad Gil, GIC, GoldenTree Asset Management, Innovius Capital, Kraken, Lux Capital, Senator Investment Group, Standard Investments, Thoma Bravo, and Wellington Management.
The fintech unicorn will use the money to scale its custom crypto infrastructure solutions for its clients, enable them to better navigate cryptocurrency trends and to grow its team.
Aspiration Partners tops up coffers with $315m
In case Monzo's $500m funding round didn't convince you that digital banking is a good bet, the US-based online financial firm Aspiration Partners provides another example. The company offers retail banking and investment advisory services.
In December it picked up $315m from private equity firm Oaktree Capital Management and affiliates of billionaire Steve Ballmer, adding their names to previous investors like Leonardo DiCaprio and Robert Downey Jr.
The deal was seen as a step towards Aspiration going public via a special purpose acquisition company (SPAC), a deal that is expected to be completed in the first quarter of 2022, according to Reuters.
The funding deal included $250m in proceeds from the issuance of non-convertible perpetual preferred stock, paying an 8% dividend and redeemable by investors after nine years, $50m of investment in the form of mandatorily convertible pre-merger securities of Aspiration purchased at a SPAC equivalent price of $11m and $15m of investment in the form of an IPVF common stock PIPE priced at $11 per share closing concurrently with the business combination.
Mambu secures $265.7m in Series E funding
You may not have heard of application programming interfaces (APIs), but you probably use them every day. For instance, when you use your Facebook login to access web services, then you use an API. Essentially, it's a way for businesses to access new services without having to spend time and money developing those services themselves.
German-based startup Mambu is a developer of API solutions for financial companies. Mambu's APIs power lending, deposit and other banking products. In December, it raised $265.7m in a Series E round, valuing the company at about $5.5bn.
The news suggests that embedded finance, which is a shorthand for financial institutions using APIs to access new services, is a trend that's set to continue for some time yet.
Adelante Soluciones Financieras bags $200m
From challenger bank Nubank's initial public offering to persistent rumours that digital payments company Ebanx would follow suit, it's clear that Latin America's fintech scene is booming. But if you're looking for additional proof that the LatAm fintech pot is bubbling, then Adelante Soluciones Financieras SAS' $200m venture funding round provides just that.
The Colombia-based fintech and digital commerce startup secured the funds from SoftBank and GIC Private.
The round included an additional $125m in debt financing, most of which came from Goldman Sachs Group.
MoMo raises $200m amidst Asia fintech boom
Christmas came early for Vietnam-based M_Service, the company behind e-wallet MoMo. The startup secured a $200m funding round and achieved its unicorn status to boot as a result in late December. The Series E funding round was led by Mizuho Bank with participation from WFM Investments, Goodwater Capital and Kora Management.
News of the raise is not surprising as South and Southeast Asian consumers have definitely caught the fintech bug. In December, research revealed that downloads of banking and alternative lending apps grew eight times across the region in the first nine months of 2021.
Users in India, the Philippines, Indonesia, and Vietnam downloaded 7.8 times as many fintech apps in August as they did in January, according to Robocash Group’s research. In January, those countries saw 33,824 app downloads. By the end of August, that figure had jumped to 264,754.
Tradeshift muscles up finances with $200m raise
The final entry on this list is Tradeshift, a cloud based business network and platform for supply chain payments, marketplaces and apps. Founded in 2010, the company achieved unicorn status in 2018 and has continued to grow since. The company shows no sign of stopping.
In December it raised $200m to fuel its continued growth. Investors backing the round included industrial conglomerate Koch Industries, IDC Ventures, LUN Partners, Private Shares and Fuel Capital.
While Tradeshift has been around for a long time, its focus on providing B2B-based fintech services is increasingly coming into vogue.
Clearly, when it comes to fintech, it's good business to focus on businesses.
Main image credit: Ascannio / Shutterstock.com
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