Global FinTech funding already surpassed 2020 levels 🚀; Potential M-Pesa spin-off 📲; Solarisbank banks €190M & buys Contis 💸
Good Morning FinTech. 9/30
2021 FinTech funding in a nutshell…
Good morning Everyone,
Trust your week is off with a great start. I see laser eyes emerging again as Bitcoin has rebounded to $37,000… Apart from that, 3 FinTech stories for today:
Global FinTech funding already surpassed 2020 levels 🚀
A whopping increase 📈 FinTechs have raised $30.79B across 657 deals, a whopping 30% rise on Q1. The total funding for 2021 already exceeds all the funding raised during the entirety of 2020, according to CB Insights.
FinTechs dominate 🙌🏼 FinTechs dominated global startup funding in all sectors: 1 out of every $5 raised in Q2 went to a FinTech. Some of the drivers:
Mega-rounds: 88 FinTechs raised more than $100M each, which accounted for 70% of total funding.
LATAM: FinTech funding in LATAM has now reached $4.25B in 2021 so far, up from $2.80B for all of 2020. Brazil took home 70% of the region’s funding in Q2.
Europe: While funding in Europe didn’t grow as dramatically as in LATAM, it attracted half of the mega-rounds of the quarter, such as for the Trade Republic, wefox, and Klarna.
✈️ THE TAKEAWAY
How’s the momentum looking like? 🤔 It doesn’t seem like stopping. At least this year… One of the key indicators of that is that FinTech-focused funds have a lot more money to dish out in the hope of more lucrative exits. Andreessen Horowitz raised $2.2B for its third crypto fund in June. This month, Index Ventures raised $2.9B that will in part invest in FinTech, and Ethos Invest announced a fund aimed to reach £1B ($1.28B). If you are a FinTech startup, it’s one of the best times ever to raise extra cash.
Potential M-Pesa spin-off 📲
The news 📃 Telco giant Vodafone could spin off its popular African mobile money service M-Pesa, the company’s CEO told Bloomberg News.
On the rise 📈 M-Pesa, which offers peer-to-peer transactions in countries that include Kenya, Tanzania, and Mozambique, saw its star rise during the COVID-19 pandemic. It has since begun exploring new services, such as savings, small loans, and payroll.
It’s all about scale 🚀 The potential spin-off only makes sense if the scale and not organic growth are at the table. If operated separately, more focus might be put towards growing M-Pesa outside its key markets. Maybe it could be another super app proposition? 🤔
✈️ THE TAKEAWAY
M-Pesa is huge! But primarily in Kenya🇰🇪… During the COVID lockdown, transactions on M-Pesa jumped 45% from the previous year. Based on figures from Kenya’s Central Bank, the volume of M-Pesa transactions is nearly equivalent to half of Kenya’s gross domestic product. Imagine spinning this off across the African continent… 👀
Solarisbank banks €190M & buys Contis 💸
Two birds with one stone 🐦 Berlin-based banking-as-a-service platform Solarisbank has set its sights on conquering Europe after raising €190M in a Series D funding round at a €1.4B (not that impressive though…) valuation and buying UK outfit Contis.
BaaS Play 🏦 Founded in 2015, Solarisbank helps companies offer their own financial services - such as digital bank accounts, payment cards, lending services, and digital asset custody - via a host of APIs. The firm recently migrated its full tech stack to the AWS cloud and moved all partners to its entirely self-developed core banking system.
The acquisition 🤝 Contis is one of the leading BaaS players, primarily focusing on Europe and UK. It’s powering the likes of Paysera, Bitpanda, Change and etc.
✈️ THE TAKEAWAY
It’s all about consolidation 🙌🏼 Solarisbank-Contis acquisition is one of the few FinTech consolidations that should come up later this year. The acquisition will give the German firm a place in the UK as well as payment processing capabilities. BaaS is a hot vertical in FinTech right now. Given that both platforms complement each other rather well, Solarisbank’s ambitions are to build an international powerhouse for Banking-as-a-Service might not be too far from reality.
🔎 What else I’m watching
Another UK FinTech IPO🇬🇧 UK-based Zopa has hired JP Morgan, to advise on what is expected to be its last funding round before it launches a public flotation. Zopa is targeting a post-money valuation of more than GBP 500M.
Crypto ATMs 💸 The number of crypto ATMs installed globally has increased by more than 70% to over 24,000 this year. ATMs can be found in 75 different countries, according to Coin ATM radar. The growth compares with a jump of almost 120% for all 2020.
Not everyone can be a bank… 🤷♂️ The banking arm of UK supermarket giant Tesco is closing all current accounts because the majority of customers do not use them.
Its own FinTech… 👀 Nigeria-based Guaranty Trust Bank (GTBank) has announced it will launch its own in-house FinTech. The bank is in the final stages of completing its transition to a holding company structure, which would allow it to own and operate non-banking financial services businesses.
PayPal likes crypto 🖤 Jesse Spiro, a former Chainalysis head of policy and regulatory affairs, will be working with PayPal’s crypto division, CoinDesk reported. Looks like the payments giant is serious on cryptocurrencies for the years to come…
HSBC goes VC 😎 HSBC Asset Management has launched a venture capital fund that will invest in FinTech companies in Europe and Asia. The strategy, which will deploy capital into business-to-business companies that offer software or financial services to other institutions.
💸 Following the Money
Charitable payments API provider Percent raises $5M for US expansion.
Paystone, payments and integrated software company has secured a $30M investment from Crédit Mutuel Equity, the private equity arm of Crédit Mutuel Alliance Fédérale.
AuthenticID, a provider of identity proofing solutions, has raised $100M in funding.
Crypto lender Celsius has confirmed that it had invested $54M in Bitcoin miner Core Scientific.
Lyra, a DeFi platform focused on options trading and built on the Ethereum layer 2 protocol Optimism, has raised $3.3M in seed funding.
Starling Bank has made its first acquisition, shelling out £50M for the buy-to-let lending operation of Hampshire-based Fleet Mortgages.
Fintech SIMON Markets has closed the first leg of a strategic financing round of up to $100M of growth capital.
Technology-enabled ecosystem for protection and insurance bolttech has acquired Europe-based B2B2C digital insurance platform i-surance. Terms of the deal weren’t disclosed.
👋 That’s it for today! Thank you for reading and have a productive Tuesday! And if you enjoyed this newsletter, invite your friends and colleagues to sign up:
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