Welcome back to The Interchange, where we take a look at the latest fintech news from the past week. If you’d like to receive The Interchange straight to your inbox every Sunday, head here to sign up! It was a relatively quiet week in the fintech startup space, so we took the time to examine where we’re seeing the most funding deals.
Seed deals everywhere
Across the board, in every industry, except perhaps ai, we’ve seen a big drop in later-stage funding deals and no shortage of early-stage rounds.
When it comes to fintech, I can tell you at least anecdotally that the vast majority of pitches that come into my inbox are for seed rounds. It is very rare nowadays to be released for Serie B or later, or even for the Serie A rounds.
Venture banker Samir Kaji, co-founder and CEO of Allocate, notes that private markets often follow the lead of public markets and, as such, it is not surprising that we are seeing many fewer later-stage deals and a large number of seeds. . rounds. He FinTech Index – which tracks the performance of publicly traded fintech startups – fell a staggering 72% in 2022, according to F-Prime Capital’s State of Fintech 2022 report.
“Seeds tend to be the least affected because those companies come in too early to feel like you have to worry about where the public markets are,” he told me in a phone interview last week. “So far we are divorced from the period in which these companies will be large enough for public market sentiment to really matter.”
Allocate, which recently just closed with $10 million in capital, he is currently an investor in about 60 funds. But Kaji is seeing the tide beginning to turn.
“The pace of investment in 2022 was very slow, and the start of 2023 was also incredibly slow, but we are starting to see things improve as people start to see supply asking for deals in Series A and later.” “They are starting to reduce,” Kaji added. “And I think business owners have begun to capitulate to this new environment. This is always the case – it’s like an 18-24 month delay in the public markets. Therefore, I would expect much more activity in the later stages in the next 18 to 24 months.”
I asked our friends at tone book What you’re seeing and as expected, Q2 saw more initial deals closed in the retail fintech space (135) compared to any other stage. When it comes to the enterprise fintech space, early-stage deals accounted for the majority of deal activity (239), followed closely by early-stage deals (221), according to PitchBook.
Will we start to see more later-stage deals in 2024? I sure hope so. Will we see any fintech go public? That’s probably less likely. But you can be sure that we will be attentive.
Slope continues its climb
It’s always great to see startups rise through the ranks, especially at a time when fintechs haven’t been doing so well. One of the companies I have had the pleasure of following is Slope. The company, founded by Lawrence Murata and Alice Deng, developed a business-to-business payments platform for large enterprises.
While covering the company’s $8 million seed funding round in 2021, I learned that Slope’s origins date back to Murata watching his wholesale family struggle to find a simpler way to manage payments. He and Deng built the company so that the transition to a digital workflow from order to cash was seamless.
Last year, Slope raised another $24 million in Series A funding, and this week it racked up $30 million in a venture round led by Union Square Ventures, which co-led the Series A. It also included participation from Sam Altman from OpenAI and a list of other VC heavy hitters. Read more. — Cristina
Slope co-founders Lawrence Lin Murata and Alice Deng. Image credits: Earring
Weekly news
TechCrunch Take: Fintech Actually Has a Value System – Here’s How We Can Get It Back
Introducing the a16z Global Payments Center
Other articles we are reading:
Apple ordered to face antitrust lawsuit against Apple Pay
Greenlight Celebrates Launch of Web-Based Financial Education Library
Financing and mergers and acquisitions
As seen on TechCrunch
Pan-African contrarian investor P1 Ventures reaches first close of $25 million for its second fund
QED and Partech back South African payments orchestration platform Revio with $5.2 million seed
Crediverso assumes the legal field after a capital injection of 3.5 million dollars
The series, which aims to replace ERP systems, obtains 25 million dollars
Seen elsewhere
Luge Capital: $71M First Close of Second Fund Completed
Colektia completes the purchase of doubtful loans for 72 million dollars
The Mexican albo receives 40 million dollars in Series C funds, seeking neobanking profitability
StretchDollar raises $1.6M in pre-seed funding
WealthTech Vega Sneaks Out With Over $8 Million in Funding
Further closes Series B financing round to obtain a valuation of $131 million – This new round comes just over a year after the wealth technology company raised a Series A at a valuation of $50 million. Check out TechCrunch’s previous coverage on Farther.
Image credits: Bryce Durbin
