EMERGING TECH RESEARCH

Fintech
Q3 2021 VC update

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Contents
Vertical overview 3 Institutional Research Group

ANALYSIS
Q3 2021 timeline 4
Robert Le Senior Analyst, Emerging Technology

Fintech VC ecosystem market map 5 robert.le@pitchbook.com

pbinstitutionalresearch@pitchbook.com
VC activity 7
DATA
Emerging opportunities 16
TJ Mei Data Analyst

FP&A automation 17
Publishing
Real-time payments 20 Designed by Julia Midkiff and Megan Woodard

Cover by Mara Potter

Institutional crypto custodians 22
Published on December 14, 2021
Select company highlights 24

Mesh 25

Transparent Financial Systems 26

Qredo 27

PitchBook Emerging Tech Report: Fintech CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 2

Q3 2021 timeline
July 7 August 1 September 22 Q3 VC DEAL COUNT
SUMMARY
Visa (NYSE: V) announces that spending Square (NYSE: SQ) announces Toast (NYSE: TOST) goes public
on its crypto-related cards, a new product its plan to acquire BNPL provider via IPO. The company provides
that boasts partnerships with companies Afterpay for $29.0 billion. Square payments and management 1,217

VC EXIT
NEWS

NEWS
including BlockFi, surpassed $1 billion
during the first half of 2021. The company
has onboarded over 50 crypto companies
and expects spending on the new
category to continue accelerated growth.
Jul 1
hopes the deal will help better tie its software to the restaurant total deals
merchant and consumer businesses industry. The listing is a remarkable
together. PayPal (NASDAQ: PYPL) turnaround for a company that was 3.8%
responded a month later by acquiring severely hurt during the pandemic QoQ growth
Japanese BNPL Paidy for $2.7 billion. and had to cut 50% of its workforce.
66.3%
YoY growth

Sep 1

Sep 30
Aug 1

Q3 VC DEAL VALUE
SUMMARY

July 1
Nubank raises almost $1.2
July 20
FTX raises a $1.0 billion Series
August 27
Affirm (NASDAQ: AFRM) announces a
$33.7B
total deal value
billion in a Series G round, the B from Sequoia Capital, Ribbit partnership with Amazon (NASDAQ:
VC DEAL
VC DEAL

largest round of the quarter. Capital, BlackRock, Tiger Global AMZN) for its BNPL services.
10.7%

Warren Buffet’s Berkshire
Hathaway led the round. The
company is expected to go
public in Q4 2021.
NEWS
Management, and over 50 other Attaining the largest US online retailer
QoQ growth
investors. This is the largest VC is a huge win for the BNPL provider
round ever tracked in the crypto as the industry continues to become 195.6%
space. increasingly saturated. YoY growth

PitchBook Emerging Tech Report: Fintech CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 4

VC activity Figure 2. FINTECH VC DEAL ACTIVITY

3,589
3,215 3,168 3,111
In Q3 2021, fintech companies globally raised $33.7 billion in VC across 1,217 deals. The
aggregate transaction volume for the first three quarters of this year stands at $88.3 billion, 2,577
2,045 2,193
which is almost double of 2020’s full-year total of $44.9 billion. Payments companies continue
1,474
to drive a large proportion of deal value, at almost $10 billion, representing 33.8% QoQ
999
growth. India-based BharatPe, a QR-code-based POS, raised the largest round of the quarter 666
489
in the segment: a $396.9 million Series E led by Tiger Global Management. Other notable $2.3 $2.5 $4.0 $10.3 $20.4 $24.7 $22.7 $51.7 $43.1 $44.9 $88.3
payment deals of the quarter include one-click checkout platform Bolt ($393.0 million Series
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
D), B2B payments and expense card management company Ramp ($350.7 million Series C),
Deal value ($B) Deal count
and Brazil-based POS hardware provider CloudWalk ($325.7 million Series B). Consumer
finance also had a strong quarter, with the largest five deals in the segment going to
Source: PitchBook | Geography: Global | *As of September 30, 2021
neobanks. These deals include Brazil-based Nubank ($1.2 billion Series G), Chime ($1.1 billion
Series G), Revolut ($800.0 million Series E), Varo ($510.0 million Series E), and Nigeria-based
OPay ($400.0 million Series C). Figure 3. FINTECH VC EXIT ACTIVITY

During the quarter, the median pre-money valuation for VC-backed, late-stage fintech 275
remained elevated at $265.0 million. Early-stage median pre-money valuations continue to
207 214
reach new highs at $40.0 million—up from $35.0 million in Q2. This leads to the highest pre-
160
money valuation step-ups, a measure to gauge valuation accretion between stages, for both
129
early- and late-stage fintech companies, at 2.8x and 2.3x, respectively. Valuation multiples 96 93
have also continued to climb higher throughout the year, with the median stretching to 21.7x 55
38 41
26 $25.3
revenue from 19.5x in Q2. If this holds through the end of the year, it will represent the highest $9.6 $7.7 $15.6 $18.2 $35.8 $244.5
$1.5 $4.5 $2.5 $3.4
recorded median revenue multiple for VC-backed fintech companies in a single year (the
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021*
previous record was 19.8x in 2015).
Exit value ($B) Exit count

Source: PitchBook | Geography: Global | *As of September 30, 2021

PitchBook Emerging Tech Report: Fintech CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 7

VC ACTIVITY

While fintech VC exits slowed QoQ, the cumulative value of $81.7 billion is still the second-
highest quarterly value recorded. However, the 102 exits represent a record high. Through the
first three quarters of the year, fintech exits have surpassed $244 billion in value. For context,
the combined trackable exit value for all fintech companies from the beginning of 2010 to the
end of 2020 was $125.0 billion. This quarter’s exit value was largely driven by public listings
via traditional IPOs, which include Robinhood (NASDAQ: HOOD), Toast (NYSE: TOST), Wise
(LON: WISE), Remitly (NASDAQ: RELY), and Blend (NYSE: BLND). Notable exits via M&A
include the $2.7 billion acquisition of BNPL provider Paidy by PayPal, the $750.0 million
acquisition of payment processing platform PayCertify by ProfitPay, and the $625.0 million
acquisition of invoicing and payments platform Invoice2go by Bill.com (NYSE: BILL).

PitchBook Emerging Tech Report: Fintech CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 8

VC ACTIVITY

Figure 10.

Key fintech late-stage VC deals

COMPANY CLOSE DATE SUBSEGMENT STAGE DEAL SIZE ($M) LEAD INVESTOR(S) VALUATION STEP-UP*

Berkshire Hathaway, Government of

Singapore Investment Corporation
Nubank July 1, 2021 Digital banking Series G $1,150.0 N/A
(GIC), Invesco, Sands Capital, Whale
Rock Capital Management

Chime September 10, 2021 Digital banking Series G $1,105.0 Sequoia Capital 1.6x

SoftBank Investment Advisers, Tiger

Revolut July 15, 2021 Digital banking Series E $800.0 6.2x
Global Management

Investment tools and Late-stage

Quantus Holdings Strategies July 21, 2021 $553.5 N/A N/A
platforms VC

Varo September 9, 2021 Digital banking Series E $510.0 N/A N/A

Digital securities and

BlockFi July 1, 2021 Series E $500.0 Hedosophia, Third Point 1.4x
services

Carta August 13, 2021 Alternative capital Series G $500.0 Silver Lake 2.2x

Late-stage
MarketFinance September 21, 2021 Commercial lending $413.4 Black River Ventures N/A
VC

OPay August 23, 2021 Wallets and super apps Series C $400.0 SoftBank Investment Advisers N/A

Payment Platforms and

BharatPe August 3, 2021 Series E $396.9 Tiger Global Management 2.8x
POS

Source: PitchBook | Geography: Global | *As of September 30, 2021

PitchBook Emerging Tech Report: Fintech CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 12

SELECT COMPANY HIGHLIGHT | TRANSPARENT FINANCIAL SYSTEMS

Founded Last financing HQ location Lead investor

2018 raised $14.0M series A Seattle, WA Pantera Capital

Total VC raised Last financing valuation

$14.0M $54.0M post-money

Overview
Leadership
Transparent Financial Systems develops a cryptographic payments settlement technology.
The company’s core product, Xand, is a real-time, decentralized settlement network that Transparent was started at the direction of the late Paul Allen and was spun out of Vulcan

facilitates secure, frictionless payments between financial institutions and businesses through Inc. in early 2018 by cofounder and CTO Jeff Kramer. Shortly after, Alex Fowler was hired as

a distributed cryptographic system with its open universal platform. Xand enables businesses the CEO and Patrick Murck as the Chief Legal Officer. Kramer previously held technical and

to own and control their own payment networks and is seamlessly integrated with their banks engineering roles at various technology companies including Microsoft and MTD Products a

via APIs. robotics company. Fowler was previously the cofounder of crypto startup Blockstream, Chief
Privacy Officer of Mozilla, and co-led PwC’s data privacy line of business for close to a decade.

Xand lets businesses build and join settlement communities, or any group of related Murck was previously a general counsel and executive director at the Bitcoin Foundation.

counterparties, to make payments instantly. These communities are managed collaboratively

and in a decentralized fashion. Payment transactions on Xand network occur via cryptographic Financing history
tokens that are redeemable on demand for US dollars, therefore limiting the volatility risk of
cryptocurrencies or the centralization of fiat-backed stablecoins. The cost of operating the Transparent raised a $14.0 million Series A round in a deal led by Pantera Capital in February

network is paid for by interest on the funds that are in active use, creating a system in which 2020, putting the company’s pre-money valuation at $40.0 million. Vulcan Capital, payments

members are paid to use the network. Members in the Xand network act as a node to settle company Square, Digital Currency Group, CMT Digital, Future\Perfect Ventures, and IDEO

payments between each other on-demand at any time, and payments are denominated in CoLab Ventures also participated in the round.

USD. Members also share in the governance of the network.

PitchBook Emerging Tech Report: Fintech CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 26

 PitchBook Data, Inc.
John Gabbert Founder, CEO

Nizar Tarhuni Senior Director, Institutional Research & Editorial

Paul Condra Head of Emerging Technology Research

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