In Q2 2020, over 28 mega deals took place with each valued at over $100 million a majority of them happening only in June. The massive growth of the e-commerce industry has also helped FinTech startups in the way.
Despite the major headwinds caused to businesses by the Coronavirus pandemic, the FinTech industry is going strong. As per the latest reports from CB Insights, during Q2 2020, FinTech startups received northward of $100 million in “megarounds” funding. With this, the FinTech funding totaled $9.6 billion during the second quarter.
A majority of the FinTech funding deals in Q2 happened in the month of June. In just a single month, nearly 141 FinTech deals happened globally with total deal value at $3.4 billion. In Q2 2020, the FinTech deal value jumped by a significant 17% from its previous quarter. While the FinTech deal value in Q1 2020 stood at $7.9 billion, Q2 alone managed to clock $9.3 billion.
As per the CB Insights report, the total number of deals reduced from 452 in Q1 to 397 in Q2. However, what contributed to the rise in the overall deal value is the jump in the “megarounds”. In Q2 2020, over 28 mega deals took place with each valued at over $100 million. In an email to Law360, CB Insights intelligence analyst Alex Kern wrote:
“The common narrative has been that COVID dampened investor activity across the board, including fintech. This is true to an extent, but deal activity in the space had been declining prior to COVID. Most of this decline has come from a pullback in funding for seed/angel rounds, which have fallen every quarter since reaching 200 in Q3 ’19. There were 90 seed/angel rounds to VC-backed companies in Q2 ’20.”
E-Commerce Surge Provides Boost to FinTech in Q2
With the governments announcing lockdown and social distancing measures, the COVID-19 has dramatically changed consumer behavior. As more and more work from home, the e-commerce industry has been the ultimate beneficiary.
The e-commerce industry has jumped from 16% of the total U.S. commerce to over 27% through Q2 2020. Amazon‘s record earnings are an easy indicator to know how the e-commerce industry has performed.
The E-Commerce boom has also indirectly helped FinTech startups to stay afloat during these tough times. Companies like Square, Stripe and Robinhood continue to garner more and more investments. Let’s take a look at some of the largest FinTech funding rounds during Q2 of 2020.
- Payment processing software giant Stripe brought around $600 million taking over company valuations to a massive $36 billion.
- Popular trading application Robinhood also garnered $600 worth of investments with its valuations going over $8.6 billion.
- Brazilian fintech Nubank raked the third-largest funding of $300 million taking company valuations over $10 billion.
But not all is hunky-dory in the FinTech space. The report predicts that the 2020 FinTech funding value and total deals will drop to pre-2018 levels. The Q2 2020 saw a major dip in seed and angel investments that hit its lowest mark in the last three years.
next