FT Partners Research has published its Q1 2022 FinTech Insights report. The report provides a comprehensive global view of fintech deal activity across private company financings, IPOs, and merger transactions. This article takes a closer look at some of the report’s highlights.
Q1 2022 Was the Most Active Financing Quarter Ever
With nearly 1,100 fundraisers, the first quarter of 2022 represents the most active quarter ever for private fintech funding. The $37.4 billion raised by these deals is the third-largest ever, just slightly behind the $39.6 billion raised in the second quarter of 2021 and the third quarter of 2021’s $38 billion.
This defies the anecdotal sentiment of a slowdown in fundraising activity. However, keep in mind that Q1 deals might have had lead times dating back to 2021. And uncertain market conditions are likely why there were no fintech IPOs this quarter.
Q1’s Unicorns
Q1 of 2022 saw 40 fintech firms achieve unicorn status (valuations of $1 billion or more). Leading the herd was crypto exchange FTX.US, the US affiliate of FTX. In late January, it announced it had raised $400 million in its first external funding round, at a valuation of $8 billion. The funding came from Softbank’s Vision Fund 2, Temasek, and the Ontario Teachers’ Pension Plan Board.
At fifth place by valuation was another crypto and blockchain company, Yuga Labs. Yuga is the company behind the Bored Ape Yacht Club, now valued at $4 billion. Like FTX.US, it achieved unicorn status, raising $450 million in an initial fundraising round led by the venture firm Andreessen Horowitz and followed by Animoca Brands, Coinbase, and MoonPay.
Other Significant Valuations in Q1
The following five firms reached Decacorn status in Q1, with valuations of $10 billion.
- FNZ, a fintech in the wealth management space, was valued at $20 billion with its latest funding round. The Canada Pension Plan Investment Board invested $1.1 billion and Motive Partners invested $0.3 billion.
- London-headquartered Blockchain.com raised an undisclosed amount in a Series D funding round led by Lightspeed Venture Partners. The crypto exchange was valued at $14 billion, and the investment included Edinburgh-based Baillie Gifford.
- OpenSea, the world’s largest NFT marketplace, grew from just $1.5 billion to $13.3 billion in just six months. Investment firms Paradigm and Coatue Management led the latest fundraising round, with participation from the actor Ashton Kutcher and Andreesen Horowitz.
- Bolt, which gives businesses one-click checkout technology similar to Amazon’s, gained $355 million in Series E financing, which gave it an $11 billion valuation. The fundraising round was led by BlackRock funds, Schonfeld, Invus Opportunities, CreditEase, and HIG Growth. Existing investors, Activant Capital and Moore Strategic Ventures, also participated.
- Alchemy, a crypto infrastructure company powering several DeFi applications and NFT platforms, raised $200 million at a $10.2 billion valuation.
And several other existing decacorns achieved valuations that positioned them as some of the most highly valued private fintech firms globally. For example, London-based global payments processor Checkout.com raised $1 billion in Series D funding at a $40 billion valuation. FTX raised $400 million at a $32 billion valuation, which it plans to allocate mainly to mergers and acquisitions.
Crypto and Blockchain Was the Most Active Sector
2021 was a record-shattering year for crypto and blockchain fundraising, with total capital raised of $20.8 billion. Activity in the sector continued to dominate Q1 of this year, with 283 deals versus 262 for banking/lending tech, the runner-up. In terms of value, banking/lending tech was ahead with $9.8 billion compared to crypto and blockchain’s total of $8.8 billion.
Tiger Global Still the Most Active Investor
American investors remain the most active globally, with New York’s Tiger Global the most active investor overall. It closed 34 new investments and 11 follow-on venture capital deals. The firm was founded in 2001 by Chase Coleman. More than a decade ago, it made a name for itself in the pre-IPO space through its investments in the likes of Facebook and LinkedIn. It has a fast-paced investment style, often willing to pay higher prices and forego board seats to leapfrog competitors.
The Hong Kong-based gaming company and venture capital firm Animoca Brands, founded in 2014 by Yat Siu, placed second overall. Its strategic and corporate venture capital deals included 42 new investments and two follow-ons.
Nine other investors made more than 20 fintech investments, and several crypto-focused investors are now featured on the leader list.
M&A Activity Strong
There were 362 mergers and acquisitions in Q1 2022, totaling roughly $49 billion. This is a lower volume than the last two quarters but a higher transaction number than the quarterly average of the last two years, which is 321. There were seven new fintech special-purpose acquisition company (SPAC) mergers announced and four cancellations of previously announced SPAC mergers during the quarter. (SPACs are shell corporations listed to acquire a private company.)