January was a strange month for fintech deals. As with other tech stocks, the financial sector has taken a tumble over the past month. Companies like Coinbase, PayPal and Mastercard have all seen the price of their stock fall.
A combination of rising inflation and anticipation of US Federal Reserve reaction is behind the investor panic. Or, to put it more accurately, rising inflation has forced the Federal Reserve to reduce its bond-buying programme, which it has used to bolster the economy. While investors had anticipated the Fed would change its policy, few expected it to move up the time-table the way it has.
There have been other causes of fintech turmoil lately. Better.com’s CEO returned to work in mid-January. He’d taken a break from the company following Zoomgate, the common name for the controversial video meeting in which he summarily sacked 900 employees on the spot. Reports are now coming in that the reemergence of the controversial captain has caused staff to abandon ship in droves. Fearing more leaks, the Better.com leadership has forced employees to sign NDAs before attending meetings, according to TechCrunch. Workers were also reportedly forced to leave their phones in paper bags and submit to metal detector scans to ensure they didn’t have any other recording devices on them.
In South Korea, the country’s internet giant Kakao has seen its stock price tank amidst a corruption scandal allegedly involving its CEO and the CEO of its fintech subsidiary KakaoBank.
January was also the month where we saw competition increase in the hardware space of the fintech industry. Apple is seemingly looking to muscle in on Block’s territory. The iPhone maker is reportedly working to launch a new service enabling small businesses to accept payments on their Apple devices without any additional hardware. Apple is also rumoured to be taking similar steps to compete with the buy-now-pay-later (BNPL) industry.
Other big news in the fintech space includes the ex-Goldman Sachs chair Lloyd Blankfein finally converting to the religion of cryptocurrencies just as the bitcoin market took a nosedive, Klarna launching its new payment card in the UK as it attempts to compete with traditional credit card companies, Facebook seemingly abandoning its cryptocurrency project, and Amazon postponing its UK ban of Visa on its platform.
Amidst these swings and roundabouts, there has been a steady flow of fintech funding deals. Activity did slow down from 995 deals in the second quarter worth $100.4bn to 747 deals worth $40.4bn in the fourth quarter of 2021. GlobalData recorded 130 fintech funding deals in the first month of 2022. While there was a plethora of fintech funding deals closing in January, some stood out from the rest simply due to size. So let’s take a closer look at the 10 biggest fintech deals from January and see what we can learn.
Checkout.com secures $1bn in Series D
There was a time when Checkout.com could comfortably say that it was Europe’s most valuable fintech company. In January 2021, the UK-based payment provider achieved a $15bn valuation on the back of a $450m injection. It couldn’t keep the crown for long, though.
In March last year, Swedish BNPL giant Klarna joined the tridecacorn club after securing a $1bn funding round and a $31bn valuation. The venture then widened its lead with a $639m funding round in June. The round saw its valuation skyrocket to an eye-watering $45.6bn, making Klarna into Europe’s most valuable privately-owned tech company.
Checkout.com has, however, not been idle. In January 2022, it announced that it too had had become a quadradecorn after a $1bn Series D funding round saw its valuation more than double to $40bn. Dragoneer, GIC, Franklin Templeton, Altimeter, the Qatar Investment Authority, Insight Partners, the Oxford Endowment Fund, Tiger Global, and an undisclosed west coast mutual fund manager were the primary investors in the funding round. The round also saw participation from some of the company’s existing investors including DST Global, Coatue Management and Blossom Capital. Checkout.com said it will use the new cash injection to solidify its balance sheet and fund its growth strategy for the US market.
nCino bags $925.57m in major raise
If you’re part of the fintech community, then you’ve heard about nCino. The US-based startup was founded in 2012 and provides operational systems for banks. Hot on the heels of the news that nCino was acquiring digital mortgage SimpleNexus for $1.2bn in December, GlobalData noted that nCino had raised $925.57m in the second biggest fintech fundraising round raised in January.
Details about the deal are scarce, but a Form D document filed with the US Securities and Exchange Commission confirms that the transaction has taken place. nCino is one of the companies that have seen its stock plummet over the past month. It is currently trading with a $4.58bn market cap. nCino did not respond to requests for comment on this story.
1Password bags $620m in a Series C round
When Iron Man, Black Widow and Deadpool team up to support a startup, then you can bet people take note. Robert Downey Jr, Scarlett Johansson and Ryan Reynolds were among the angel investors backing cybersecurity unicorn 1Password’s $620m Series C round in January.
The Toronto-based firm now has a $6.8bn valuation. ICONIQ Growth led the funding round. Accel, Tiger Global, Lightspeed Venture Partners and Backbone Angels also participated in the raise. As its name suggests, 1Password enables users to securely manage passwords and credentials and is used by more than 100,000 businesses. Its customers include IBM, Slack and Shopify. With the number of hacks happening in the financial sector, it’s easy to see how this cybersecurity company fits in with the rest.
Qonto bags $552m in Series D
French fintechs have celebrated a bit of a victory lap lately. President Emmanuel Macron’s long-term strategy to make France a hub of tech innovation seems to have panned out. The strategy has included slashing corporate tax, introducing tech visas and making it easier to source talent. In 2019, the president set the goal that France would have 25 unicorns by 2025.
In January, it got its 26th startup company worth over $1bn when corporate spend management firm Spendesk raised $114m in a Series C round. It was the fourth French tech company to reach unicorn status in 2022. The others were Ankorstore, Exotec and Quonto as well as PayFit, which we’ll talk about more later. While SME financing platform Quonto proved to be the 24th unicorn created in France, it did raise the fourth biggest fintech round recorded by GlobalData in January. It secured €486m ($552m) in a Series D round at the beginning of the month. The raise saw it achieve a €4.4bn valuation.
Bolt Financial nets $355m in Series E Funding
Online payments platform Bolt Financial – not to be confused with Estonian delivery venture Bolt – secured a $355m in a Series E round in January. The round put Bolt Financial’s valuation at $11bn, making it a decacorn. However, the fintech said this was only the first part of its Series E funding, so more is to come. The checkout company’s new funding round came just months after it secured $399 m in a Series D round in October last year.
The new Series E funding round will enable Bolt Financial to continue keep growing by expanding its team and to join forces with more retail partners. “And we’re just scratching the surface of this commerce revolution,” said Ryan Breslow, founder and CEO of Bolt Financial. “Over the next 18 months, 100 million shoppers are lined up to join the Bolt network.” BlackRock Schonfeld, Invus Opportunities, CreditEase H.I.G. Growth, Activant Capital and Moore Strategic Ventures backed the Series E round.
Brex bags big $300m Series D-2
US-based Brex clocked up $300m in new funding in January, pushing its valuation past the $12.3bn mark. Greenoaks Capital and TCV co-led the raise. While Brex started life three years ago as a credit card provider for SMEs, it has since become a one-stop fintech shop for smaller ventures. It plans to use the cash injection to further this expansion, according to TechCrunch. Interestingly, this month also saw it team up with 1Password, mentioned earlier in this list. The partnership will see them launch a new way to simplify online payments safely, Fintech & Finance News reported.
PayFit secures 287.24m in Series E Funding Round
PayFit was another French fintech firm to achieve its unicorn status in January. The payroll management platform secured $287.24m in a Series E round at a $1.82bn valuation in early January. Accel, Bpifrance Large Venture, Eurazeo Growth and General Atlantic backed PayFit’s Series E round. It has raised €179m since launching in 2015.
Since then, it has expanded beyond France’s borders to Spain, Germany and the UK. On the back of the new cash injection, it is now planning to go even further afield. It also plans to expand its team of 700 current employees to over 1,000 over the next year. PayFit most recently raised a €90m Series D round in March 2021.
Brazilian Creditas hit $4.8bn valuation the back of $260m Series F
As Verdict has reported in the past, Latin America is one of the most exciting regions in the world for the fintech industry right now. Investment into the region’s fintech ventures has consistently doubled every year since 2016 to land at $4.7bn in the first half of 2021 alone.
Creditas Financial Solutions adds to that picture. The Brazilian lending platform secured $260m in a Series F round in January, pushing its valuation past the $4.8bn mark. The round put the total amount injected into Creditas at $829m across six different rounds. Fidelity Management and Research Company, Actyus and Greentrail Capital joined the round.
Other investors included QED Investors, VEF, SoftBank Vision Fund 1, SoftBank Latin America Fund, Kaszek Ventures, Lightock, Headline, Wellington Management and Advent International, via their affiliate Sunley House Capital.
“Creditas has become a powerful platform with recurrence and continues to be the best cost alternative for those looking for credit,” said Paulo Passoni, managing partner of SoftBank Latin America Fund. “The company’s relentless focus on the consumer has delivered consistent exponential growth in transactions driven by better data, lower costs, improved engagement and higher recurrence. Creditas has become a virtuous, self-reinforcing ecosystem."
Creditas will use the money to accelerate its strategy across three verticals: home, auto and employee benefits.
CAIS top up coffers with $225m venture round
Wealthtech is a smaller segment of the fintech space. As the name suggests, the sector includes companies that help people and businesses manage their wealth with technology. Wealthtech is big business: over $20bn of venture capital was injected into the industry in the first three quarters of 2021, according to FinTech Global.
So it is hardly surprising that at least one company making the list of the 10 biggest fintech funding rounds of January would be a wealthtech company. Capital Integration Systems, or CAIS, is a New York-headquartered startup that provides tech solutions for wealth managers. The company secures a $225m in a round led by Apollo Global Management and Motive Partners along with participation from Franklin Templeton Investments.
“We are honoured to have Apollo, Motive, and Franklin Templeton as our new shareholders and partners,” said Matt Brown, Founder and CEO of CAIS. “This investment advances the critical role CAIS plays in revolutionising how the alternative investment and wealth management communities engage, learn, and transact.”
CAIS will use the money to grow its technology stack, strengthen customer experiences and "explore strategic opportunities."
QRAFT Technologies secures $144m in from SoftBank
KakaoBank's ongoing woes may've put a wet blanket on the South Korean fintech scene. However, the nation still made it into the top 10 list of the biggest fintech funding rounds raised in January.
QRAFT Technologies is a company that kind of brings fintech back to its roots when it was all about helping traders, well, trade. Although, it is a bit more complicated than that. The startup's artificial intelligence solution creates and manages exchange-traded funds. In early January, news broke that QRAFT Technologies had raised $144m from SoftBank.
The cash injection included primary growth capital and secondary capital that will be used to fund share purchases from investors. It is believed that the raise will further the fintech's expansion into the States and into China.