What is fintech?
May 20, 2019
Like shorthand terms for other industry verticals, “fintech” (aka, financial technology) gets used so often, it can feel like there was never a time it didn’t exist. Whether you’re new to the space or just want to brush up, here’s a look at fintech—what kinds of companies it refers to, its history and top fintech startups and investors.
Fintech as an industry vertical refers to companies that employ the internet, blockchain, software and/or algorithms to offer or facilitate financial services traditionally offered by banks. Fintech companies can facilitate personal loans like Avant, process online payments like Braintree, provide investment management services like Enfusion and simplify wealth management like SoFi. The vertical can refer to software that automates financial processes or addresses core business needs of financial firms themselves as well.
The first fintech wave happened in the early 2010s, and technologies then focused on lending, payments and money transfer. Today, those first-wave companies have attracted significant late-stage VC investments and are gaining meaningful market share. We're in the second wave of fintech now, and this era has been marked by accelerated developments within capital markets, financial regulations and digital assets. These companies are seeing increased early-stage investments.
If you're already a PitchBook customer, ask your account manager about our new Emerging Technology Research reports on fintech and other disruptive tech sectors.
What are industry verticals? Find out here.
Fintech as an industry vertical refers to companies that employ the internet, blockchain, software and/or algorithms to offer or facilitate financial services traditionally offered by banks. Fintech companies can facilitate personal loans like Avant, process online payments like Braintree, provide investment management services like Enfusion and simplify wealth management like SoFi. The vertical can refer to software that automates financial processes or addresses core business needs of financial firms themselves as well.
The first fintech wave happened in the early 2010s, and technologies then focused on lending, payments and money transfer. Today, those first-wave companies have attracted significant late-stage VC investments and are gaining meaningful market share. We're in the second wave of fintech now, and this era has been marked by accelerated developments within capital markets, financial regulations and digital assets. These companies are seeing increased early-stage investments.
Top 5 fintech VC startups by total amount raised
Ant Financial ($23.4B)
Based in Hangzhou, China and founded in 2004, Ant Financial is the operator of a cloud-based financial platform designed to provide cloud computing services to financial enterprises. Ant Financial spun out of the Alibaba Group, one of the three companies—along with Baidu and Tencent—that dominate Chinese venture capital. Read more about the BAT companies.Paytm ($3.62B)
Paytm is a mobile payment and ecommerce platform that provides bill payment services. Based in Noida, India and founded in 2000, Paytm claims to be India's largest payments business, catering to a merchant base of more than 8 million. The company raised $1.4 billion from SoftBank, which also invested in Ant Financial, in 2017. Read more about SoftBank's high-profile investments in Indian startups.JD Digits ($2.95B)
JD Digits offers an investment and financing platform that provides customized financial services, investment and financial management. Headquartered in Beijing, JD Digits is in the process of raising ¥13 billion of Series B venture funding from CITIC Capital Partners. We highlighted JD Digits at the close of 2018 because it was part of a larger trend of big fundings in not-so-little China.SoFi ($1.92B)
San Francisco's SoFi, which got its start as a student loan provider, offers online banking, personal, mortgage and wealth management services. The company is one of the 25 most valuable VC-backed companies in the United States and is currently in talks to raise an undisclosed amount of venture capital funding from several investors.Fair ($1.56B)
Fair is the developer of a car-leasing platform intended to offer a new way to get a car that responds to customer demand for more freedom. Fair allows users to select their car, miles and view their payments—all through a simple, transparent and affordable mobile process. Most recently, the Santa Monica-based company received $50 million of debt financing from Silicon Valley Bank.Top 5 fintech VC investors by number of investments made in the last year
- Plug and Play Tech Center: 57 fintech investments, including WorldCover, Insurdata and Evari Insure.
- Y Combinator: 38 fintech investments, including WorldCover, VertoFX and Seawise Capital.
- 500 Startups: 37 fintech investments, including RebajaTusCuentas.com, SmartCrowd and Custodian.
- Techstars: 24 fintech investments, including Capexmove, Paid and Spark Change.
- Startupbootcamp: 20 fintech investments, including handdii, Cobertoo and Hurra.
If you're already a PitchBook customer, ask your account manager about our new Emerging Technology Research reports on fintech and other disruptive tech sectors.
What are industry verticals? Find out here.
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