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Leading VC giants Sequoia & a16z undertook several investments in the fintech space in 2022, more than any other sector.
Sequoia Capital and Andreessen Horowitz (a16z) reportedly invested more in fintech than any other sector last year. Both leading venture capital firms made sizable investments in fintech despite the tech downturn that characterized much of 2022. For instance, Sequoia had over 100 investments in the sector, representing roughly a quarter of its deals. Meanwhile, a16z participated in 206 fintech deals in 2022, also representing a quarter of total investments last year. Furthermore, 60% of Andreessen’s fintech investments closed in H1 2022, while the rest closed in the second half.
More on Sequoia & a16z 2022 Fintech Investments
The Sequoia & a16z 2022 fintech investments saw both prominent VC platforms back a combined 74 companies last year. Sequoia’s top three fintech targets were capital markets, payments, and payroll and benefits, each category representing 16% of investments. Meanwhile, Andreessen’s top three targets were payments (28%), digital lending (12%), and blockchain (22%).
Three-quarters of Sequoia’s capital market deals were follow-on investments, which reflected the company’s belief in the sector. Some deals the Menlo Park-based firm participated in included Capitolis’s $110 million Series D and Ledgy’s $22 million Series B. Sequoia also notably invested in Citadel Securities’ $1.2 billion funding round and Watershed’s $70 million Series B.
Meanwhile, 28% of a16z’s 2022 fintech investments were in the payments sector, with SpotOn’s $300 million Series F being a prime example. In addition, the Menlo Park, California-based VC firm also invested in Tally Technologies’ $80 million Series C and Jeeves’ $180 million Series C.
Sequoia Consumer & Business Payments Investments
Sequoia’s payment-related investments covered both consumer and business payments in four distinct markets, including buy now, pay later (BNPL), online payments acceptance, expense management, and peer-to-peer (P2P) payments. Notable examples of such investments include Klarna’s lofty $800 million financing, Telda’s $20 million seed financing, and Yokoy’s $80 million Series B. Additionally, Sequoia also participated in Cococart’s $4 million seed round last February. At the time, Derek Low, co-founder and CEO of the online merchant store facilitator, explained the need for Cococart’s services. Describing Cococart as a perfect solution to the tedium of online order-taking by local private businesses, Low said:
“Honestly, managing orders is hard; most local businesses are still taking orders on WhatsApp and managing their orders using spreadsheets. It sucks up so many hours of time, which could be better spent growing the business. We’re at the forefront of a new wave of local entrepreneurs.”
Furthermore, Low added:
“We’re inspired every day by stories of our merchants who started from selling food from their kitchen but are now running retail stores with commercial kitchens. Our mission is to transform local businesses and empower business owners to pursue their passion.”
The sizable fintech investments by Sequoia and a16z in 2022 strongly demonstrate the companies’ faith in the sector. These fintech investments also suggest that although the industry might experience a downturn, fintech prospects would eventually improve again.