Select Page

Despite the Covid-19 pandemic, Q1 ‘21 fintech funding in the US rose both in amount and transaction volume, outpacing 2020. According to a CB Insights report, fintech companies raised about $22.8 billion globally in the first quarter of this year, across 614 deals. Per the report, deals in Q1 soared 15% compared to the same period in 2020, denoting a modest yet notable rise in the wake of bruised global markets.

Moving closer to home, North America accounted for the biggest chunk of the funding standing at $12.8b across 264 deals. Europe followed with $5b for 151 deals, and Asia came in third with $3.7/147 deals. Together, the three regions secured about 90% of the global deals during this year’s first quarter. Both South America and Australia netted 31 deals combined, resulting in a modest increase from the same quarter last year. Africa, on the other hand, recorded a 22% decline in fintech funding deals to close the quarter with only 21 deals worth $45M.

Breaking Down the Funding

Sure, most regions realized a notable increase in fintech funding but breaking down the subsectors, you realize that investors are gravitating towards a few specific investments such as payments-backed startups, digital bankers and lenders, among others. Compared to the last quarter of 2020, funding for payments firms tripled, affording these companies more than $6b in new capital. The funded projects also increased by 50% to 114.

Next are the digital banking companies. While the number of deals fell by 12% to 65, the amount of funding rose by 25% in Q1 ‘21. This was the only decline in deals since 2019 in this fintech subsector.

Digital lending firms also recorded an impressive $4b worth of new deals in Q1 ‘21. The subsector’s funding tripled in the first quarter as well as the number of funding deals. There were about 8 mega-rounds of funding in the same period, settling at a new high since Q4 ‘19. 

Other noteworthy fintech sectors that registered record funding deals include wealth management at $5.4b, insurtech at $2.3b, capital markets at $8b, plus a few others. 

With the second quarter rolling out, the markets seem to be taking an upward trajectory, even as investors yearn for a pie of the larger tech sector. But whether or not this outlook indeed materializes can only remain to be seen, as lockdown measures continue to be eased worldwide.