Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
If you just read the headlines, you’d be excused for thinking that venture capital investment into financial-technology companies is at an all-time high.
Big deals this year like Plaid’s $5.3 billion dollar exit to Visa, Galileo’s $1.2 billion sale to SoFi, along with CreditKarma’s $7.1 billion deal with Intuit made for a tidy start to 2020. But despite the later-stages of fintech-focused startups seeing healthy amounts of liquidity, aggregate venture capital activity in the historically well-funded sector was light in the first quarter of 2020.
According to a new Q1 2020 report covering venture data from CB Insights, VC dollars invested in the sector fell to levels not seen since 2017, while venture deal volume in fintech fell to 2016 levels. There are any number of reasons for this pullback that you can fill in, including COVID-19 and its resulting economic impacts. But what’s even more interesting is where the money and deals did and did not go inside of the various fintech categories.
Indeed, fintech has become so complicated as a startup grouping, it’s nearly as diffuse as discussing “SaaS” companies as a cohort. Of course, fintech is a product focus while SaaS is a business model (there are fintechs that sell SaaS, to be clear), but the general point holds.
Let’s dig into the top-line data to better understand the fintech funding landscape in Q1 (TechCrunch recently spoke to VCs on their expectations for the sector today and in the future). After the high-level stuff, we’ll dig into a few notes concerning sub-sectors of particular interest, including wealth management and insurtech.
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