What Is Fintech Really?

What Is Fintech Really?

JULY 25, 2024

By: Tyler Brown

Banking and Venture Capital

Fintech funding perked up in Q2 2024, according to CB insights, with $8.9 billion in capital raised globally across 817 deals. Stripe’s $694 million tender offer, which closed in April, was the top deal at 7.8% of total funding. It was also an anomaly: The offer was earmarked to provide liquidity to employees instead of fund growth. Creating liquidity has been a pattern for Stripe as it stays private: Last year, Stripe said it raised money to cover a tax bill associated with stock granted to employees and to give them liquidity. News also just broke that Sequoia Capital had offered to buy out shares its investors hold in Stripe.

Other familiar fintechs raised money in Q2:

Rippling, a workforce management platform, raised a $200 million Series F. It bundles tools for human resources, payroll, compliance manageent, time and attendance, expense management, bill pay, and corporate cards. It’s a prime example of rolling up software solutions with adjacent financial services.
UK neobank Monzo had an encore, raising a $190 million top-up round to its $431 million Series I. It was a vote of confidence as the neobank considers a big push into the US market. Monzo is on a hot streak — it reported a pretax profit in 2023 and more than doubled its 2022 revenue, surging back from a brush with death in 2020. A US push just might work: the contraction in consumer fintech has clarified the competition.
Ramp made an appearance with a $150 million extension to its $300 million Series D. It reportedly plans to spend the money on artificial intelligence-driven automation and insights. It will also use the money for acquisitions. Recent acquisitions may indicate what it’s looking for — Ramp acquired the procurement-management startup Venue earlier this year. Last year, it bought Cohere.io, a company focused on the automation of customer support.

Some top deals raise the question: “What is fintech?” The next-largest deal to Stripe was a $650 million Series F for AlphaSense, a platform that competes with research tools from Bloomberg, Morningstar, and FactSet. All are commonly used by financial services firms, particularly in capital markets, but AlphaSense doesn’t offer financial products or services itself. In this case, tools with applications targeted at enterprise customers in the financial services industry suffice.

Other names that raised big rounds were a grab bag. Restaurant365, which raised a $175 million Series E, echoes Rippling’s general solution with features and applications designed specifically for the restaurant industry, including accounting and payroll, inventory management, and HR management. Altruist, which raised a $169 million Series E, offers custodial services and practice management tools for investment advisors. Sidecar Health, which raised a $165 million Series D, provides medical plans.

Fintech funding seems to have normalized after a year of roughly flat global funding. Big names still get a lot of attention and money, but the sector is alive and well — fintech is diverse and constantly evolving, and it’s worth watching who’s getting funded at earlier stages. Relatable names with B2C or SMB solutions sometimes obscure innovation in enterprise-only applications, like research tools, for example, or investment management, which are also worth a look.

What Is Fintech Really?

What Is Fintech Really?

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