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1 1 2 W H O W E A R E The technology market intelligence platform. CB Insights software lets you predict, discuss, and communicate emerging technology trends using data in ways that are beyond human cognition. We are a leader in the Expert Automation & Augmentation Software (EAAS) space. 3 T R U S T E D B Y T H E W O R L D ' S L E A D I N G C O M P A N I E S "We use CB Insights to find emerging trends and interesting companies that might signal a shift in technology or require us to reallocate resources." Beti Cung, Corporate Strategy, Microsoft 4 4 LENDING BLOCKCHAIN/ CRYPTO REGTECH PERSONAL FINANCE PAYMENTS/ BILLING MONEY TRANSFER/ REMITTANCES WEALTH MANAGEMENT CAPITAL MARKETS MORTGAGE/ REAL ESTATE INSURANCE GLOBAL FINTECH REPORT Q2 2018 Marketplace lending & alternative underwriting platforms Payments processing, card developers, & subscription billing software tools Tools to manage bills and track personal and/or credit accounts Audit, risk, and regulatory compliance software Companies leveraging blockchain technologies for financial services Companies selling insurance digitally or providing data analytics and software for (re)insurers Sales & trading, analysis, and infrastructure tools for financial institutions Investment and wealth management platforms and analytics tools International money transfer and tracking software Mortgage lending, digitization, and financing platforms WHAT THIS REPORT C OVERS 5 H1'18 saw 46 fintech M&A and IPO exits: As the strongest six-month period for fintech exits to date, H1 saw former unicorns GreenSky and Adyen go public and iZettle get acquired for $2.2B, 2x its target IPO price. Quarterly record for fintech mega-rounds as Asia beats US for first time: Asia took the top spot with 7 mega-rounds, beating the US for the first time. Early signs of fintech investment spreading to frontier markets: In Africa, VC-backed fintech companies in Q2'18 raised $63M across seven investments, more funding than the last four years combined. 29 fintech unicorns valued at $84.4B: Q2'18 saw five new unicorns births, bringing up the total VC-backed unicorn count to 29 worth a combined $84.4B. Ribbit Capital is the most active fintech unicorn investor, followed by QED Investors. Note: Report focuses on all equity rounds to VC-backed fintech companies. This report does not cover companies funded solely by angels, private equity firms, or any debt, secondary, or line of credit transactions. All data is sourced from CB Insights. Summary of findings Ant Financial's $14B boosts Q2 funding to record $20B: In Q2'18, VC- backed fintech companies raised $20.3B across 383 deals globallynew quarterly records in funding and deals. Excluding Ant's record financing, VC-backed fintech funding still hit a quarterly record at $6.3B, up from $5.6B in Q1'18. Asia could be on track to surpass the US in fintech deals: Asia set a quarterly record with 133 deals, driven by a spike in early-stage deals and a 94% increase in deals in China, which saw 68 deals worth $15.4B. In the US, early-stage deals as percentage of total deals fell to a five-quarter low. Europe saw Q2'18 deals rebound with surge in early-stage deals: The boost in early-stage deals helps explain a dip in funding. Despite a 20% funding decrease from Q1, funding for H1'18 beat H1'17. Europe also minted a unicorn (Revolut) and had two largest exits to date. US remains top market with five-year funding record: Q2'18 saw a slight dip in deals from Q1'18's record, but it was still a quarterly high for funding to US-based fintech companies on the back of six mega-round investments which minted two unicorns (Circle and Tradeshift). 6 Contents 8 Q2'18 Financing Trends Annual Deals & Dollars Regional Trends Fintech Unicorns 63 6 9 Incumbent Fintech Investing Update Appendix: Major markets financing trends M&A and IPO trends 21 Top Deals and Top Investors Q2' 2018 Top VC-Backed Fintech Deals Most Active Fintech Investors Q2'17-Q2'18 Q2'18 Sector Trends 26 7 $20.34 BILLION 383 DEALS G L O B A L F I N T E C H V C - B A C K E D E Q U I T Y F U N D I N G I N Q 2 ' 1 8 : A C R O S S 8 Global fintech deals are on pace for a record year Annual VC-backed global fintech deals and financing, 2013 2018 YTD (Q2'18), ($B) 1,476 $3.8 $7.9 $15.3 $18.7 $16.7 $26 588 796 984 1,086 1,216 732 2013 2014 2015 2016 2017 2018 9 $1,131 $918 $1,108 $1,701 $1,794 $1,279 $3,172 $2,573 $4,601 $6,004 $2,136 $5,259 $8,269 $2,782 $2,376 $2,975 $5,518 $4,001 $4,251 $5,628 $20,335 135 161 169 175 183 210 228 219 257 278 230 304 271 258 253 292 325 303 296 349 383 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q2'18 sees a new quarterly record for global VC- backed fintech deals & funding 10 $1,131 $918 $1,108 $1,701 $1,794 $1,279 $3,172 $2,573 $4,601 $6,004 $2,136 $5,259 $2,782 $2,376 $2,975 $5,518 $4,001 $4,251 $5,628 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Ant Financial's record investment accounted for 69% of Q2'18 fintech funding $4,500$14,000 11 $1,131 $918 $1,108 $1,701 $1,794 $1,279 $3,172 $2,573 $4,601 $6,004 $2,136 $5,259 $3,769 $2,782 $2,376 $2,975 $5,518 $4,001 $4,251 $5,628 $6,335 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Excluding Ant Financial's $14B round, Q2'18 still a record high *Ant Financials' $14B round in Q2'18 was excluded from the chart represented on this slide for illustrative purposes * * 12 130 136 122 169 158 91 90 80 94 133 72 68 77 69 72 3 1 3 1 7 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Africa sees first jump in fintech deals and Asia posts record quarter in Q2'18 Global VC-backed fintech deals by continent, Q2'17 Q2'18 Europe Asia North America -7% YOY Africa +133% YOY +46% YOY +4% YOY 13 $2,122 $2,103 $2,536 $2,230 $3,296 $2,801 $1,379 $699 $2,042 $2,070 $522 $496 $903 $1,065 $852 $63 $41 $12 $103 $271 $30 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 South America saw the largest fintech funding dip Global VC-backed fintech funding by continent, Q2'17 Q2'18, ($M) (*Ant Financial excluded) *Ant Financials' $14B round in Q2'18 was excluded from the chart represented on this slide for illustrative purposes South America -89% QOQ Africa Europe -20% QOQ Asia +1.4%* QOQ North America 48% QOQ 99.6% QOQ 14 Early-stage deals were strongest in Asia & Europe Quarterly deal share by stage to global VC-backed fintech companies, Q2'17 Q2'18 Mid-Stage Early-Stage Late-Stage Other 60% 60% 61% 55% 56% 17% 20% 21% 21% 20% 7% 9% 9% 9% 7% 16% 11% 8% 16% 17% Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 15 74 69 72 95 79 63 60 47 50 78 38 45 50 36 44 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Asia nears the US in early-stage deals Quarterly Seed and Series A deals to VC-backed fintech startups, Q2'17 Q2'18 I N V E S T O R S A R E L O O K I N G O U T S I D E O F T H E U S F O R E A R L Y - S T A G E F I N T E C H O P P O R T U N I T I E S Europe Asia North America -17% YOY +46% YOY +22% YOY 16 Asia beats US with 7 fintech mega-rounds Q2'18: 14 mega-rounds ($100M+), worth a total $16.83B I N V E S T O R S A R E P O U R I N G R E C O R D F U N D I N G R O U N D S I N T O A S I A O V E R T H E U S & E U R O P E 6 6 7 4 6 4 5 1 4 7 1 1 4 1 1 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 North America Asia Europe South America 17 29 FINTECH UNICORNS $84.4 BILLION G L O B A L L Y T H E R E A R E V A L U E D , I N A G G R E G A T E , A T 18 CHINA UNITED KINGDOM INDIA SWEDEN EUROPE ASIA 29 fintech unicorns valued at $84.4B Global VC-backed fintech companies with a private market valuation of $1B+ (as of Q2'18) $1.79B $5.3B $1B $1.46B Valuation $1B $18.5B $1B $1.6B Valuation $2.5B $1B $1.56B $1.24B $1B $1.2B $9.2B $1B $1.9B $2B (as of Q2'15) $3.2B $4.5B $1B Valuation $4B $1B $1B - $2B BRAZIL SOUTH AMERICA UNITED STATES NORTH AMERICA $1.1B $1.7B $3B Valuation $1.2-$1.6B $7B 19 CHINA SWEDEN Q2'18 sees 5 fintech unicorn births Global VC-backed fintech companies with a private market valuation of $1B+ (as of Q2'18) $1.79B $5.3B $1B $1.46B Valuation $1B $18.5B $1.6B Valuation $2.5B $1B $1.56B $1.24B $1B $1.2B $9.2B $1B $1.9B $2B (as of Q2'15) $3.2B $4.5B $4B $1B $1B - $2B BRAZIL SOUTH AMERICA $1.1B $7B $1B $1B Valuation $1.7B $3B Valuation $1.2-$1.6B EUROPE NORTH AMERICA INDIA ASIA UNITED KINGDOM UNITED STATES 20 Fintech unicorn hunters Investors ranked by the number of fintech unicorns in their portfolio from 2009 Q2'18 10 6 5 5 5 5 4 4 4 4 Ribbit Capital QED Investors Andreessen Horowitz SV Angel DST Global Institutional Venture Partners capitalG Founders Fund Index Ventures Sequoia Capital #AhaCBI Top investors & deals 22 The most active fintech VCs from Q2'17 Q2'18 By unique fintech company investments (new or follow-on) Rank Investor Select Q2'17 Q2'18 Fintech Investments 1 2 2 4 23 Rank Investor Select Q2'17 Q2'18 Fintech Investments 5 5 7 8 The most active fintech VCs from Q2'17 Q2'18 By unique fintech company investments (new or follow-on) 24 Company Deal Date // Amount Total Disclosed Funding (M) Select Investors Description May'18 // $14,000M $19,145M ($150B Valuation) Silver Lake Partners, General Atlantic, T. Rowe Price, Temasek Holdings, Sequoia Capital China, Warburg Pincus, & others China-based internet giant that provides a suite of financial services spanning payments, insurance, credit, wealth management, and others, through various subsidiaries including Alipay & Yu'e Bao Jun'18 // $392M $569M ($1.2-$1.6B Valuation) Venrock, Goldman Sachs, GSV B2B data analytics suite of modular desktop and API applications that leverage social media to detect events, consumer signals, and alerts May'18 // $363M $539M ($5.6B Valuation) capitalG, DST Global, ICONIQ Capital, Kleiner Perkins Caufield & Byers, Sequoia Capital B2C digital brokerage and financial services platform that lets users invest in U.S. stocks, ETFs, options, and cryptocurrencies Jun'18 // $359M $536M Geo-Jade Petroleum Corporation, Shunwei Capital Partners Web-based investment portal that provides various debt-backed investments products for individual and SMB investors May'18 // $250M $455M ($1.1B Valuation) Goldman Sachs Principal Strategic Investments, HSBC,GP BullHound Sidecar, Gray Swan, H14 A procure-to-pay supply chain management platform for SMBs and enterprises Top 10 global fintech deals in Q2'18 The top 10 deals to VC-backed fintech companies were all mega-rounds ($100M+) and half were in Asia 25 Company Deal Date // Amount Total Disclosed Funding (M) Select Investors Description Apr'18 // $250M $336M ($1.7B Valuation) DST Global, Index Ventures, Ribbit Capital, Rocket Internet UK-based "challenger bank" that launched a mobile payments and "top-off" card and has been rapidly expanding into new services like crypto investing and into markets in the EU and the US Jun'18 // $245M $19,145M ($150B Valuation) China Pacific Insurance China-based internet giant that provides a suite of financial services spanning payments, insurance, credit, wealth management, and others, through various subsidiaries including Alipay & Yu'e Bao Jun'18 // $200M $347M ($1B Valuation) Softbank Capital India-based online comparison, quotes, and recommendation tool for life & general insurance, loans, and credit cards that partners with issuing financial institutions May'18 // $178M $232M Undisclosed Investors* (*not a token sale) Cryptocurrency wallet that provides investors with Bitcoin portfolio management, corporate treasury, and enterprise enablement Apr'18 // $159M $263M China Reform Holdings, Sequoia Capital China B2B alternative data platform for bank and insurers to provide credit services and other financial services and serve as a CRM for outstanding loans Top 10 global fintech deals in Q2'18 (continued) 4 of the top 10 deals to VC-backed fintech companies created new unicorns 26 SMB FINTECH ALTERNATIVE LENDING INSURANCE PAYMENTS/ BILLING PERSONAL FINANCE WEALTH MANAGEMENT BLOCKCHAIN CAPITAL MARKETS MACROS SECTOR TRENDS G L O B AL V C - B AC KED F IN T E C H Q 2 ' 1 8 27 SMB FINTECH MACROS SECTOR TRENDS G L O B AL V C - B AC KED F IN T E C H Q 2 ' 1 8 28 SMB Fintech in North America & Europe *The map is not meant to be exhaustive of companies in the space SMBs were a key focus of deals across the fintech ecosystem In Q2'18, many fintech startups that raised funding are looking to solve SMBs needs beyond obtaining loans & financing Small businesses remain underserved by established players that target bigger corporates. 29 Tradeshift is a procure-to-pay supply chain management platform for SMBs and enterprises. Tradeshift's suite of applications include Pay (for dynamic discounting and supply chain financing), Buy (for marketplace procurement), and Apps (for general supply chain digitization). Tradeshift integrates with many popular SMB apps. S H I F T I N G T R A D E F I N A N C E R I S K A W A Y F R O M S M B S Last Funding $250M Series E // May'18 S E L E C T B A N K I N V E S T O R S Valuation $1.1B S E L E C T I N T E G R A T I O N S 30 Banking on startups as the next SMB battle ground Select Q2'18 SMB fintech investments in the US: Divvy is a B2B payments & expense platform for SMBs that issues virtual & physical corporate credit cards (through Mastercard). Allocations to the digital & physical cards are "divvy'ed" out by the employer through a central app that that automatically captures transactions, categorizes purchase, and automates expense reporting. Last Funding $10.5M Series A // Utah Select Investors Pelion Venture Partners Brex is a B2B financial services company focused on startups. Brex's core products include a credit card and a digital expense management & reporting app. Brex partners with Visa & Sutton Bank to issue the cards and accounts and does KYC and underwriting in-house. Last Funding $50M Series B // San Francisco Select Investors Ribbit Capital, Y Combinator, Yuri Milner, Max Levchin, Peter Thiel B 31 Select Q2'18 investments: Banking on startups as the next SMB battle ground Open provides banking services to startups and entrepreneurs. Open offers a digital banking platform, business spend card, and bank account that can make and receive payments. Open integrates with other business finance systems & popular SMB apps. Last Funding $2.4M Seed B // India Select Investors ISME ACE, Recruit Strategic Partners, Unicorn India Ventures Pleo offers a prepaid card through Mastercard for employers to allocate and reimburse employees. The cards connect to Pleo's app that automatically categorizes expenses, captures receipts, and tracks expenses. Pleo partners with 1,700 companies and integrates popular SMB accounting and finance platforms. Last Funding $16M Seed A // Denmark Select Investors Creandum, Founders, Kinnevik, Seedcamp Aprila Bank is a digital bank targeting invoice financing for SMBs & entrepreneurs. Aprila cuts down the credit approval process and requires less transaction history than traditional banks. In April'18, Aprila integrated with Tripletex's accounting systems to offer liquidity and working capital to Tripletex's 30,000 SMBs. Last Funding $21M Unattributed // Norway Select Investors Alliance Venture, Arts Alliance, FJ Labs + 32 ALTERNATIVE LENDING MACROS SECTOR TRENDS G L O B AL V C - B AC KED F IN T E C H Q 2 ' 1 8 33 Deals to alternative lending startups see uptick but still on pace for a new funding low Global alternative lending VC-backed financing trends, Q2'17 Q2'18, ($M) $805 $1,214 $1,045 $840 $639 40 41 34 33 38 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 34 Profitable GreenSky 'bears' market volatility Source: CB Insights public market data T H E G R A S S S T I L L I S N ' T G R E E N E R O N T H E P U B L I C S I D E F O R L E N D I N G Stock Price ($) $1.1B Market Cap GSKY:$19.01 (7/13/18) IPO Details Offering: 38M shares Price: $23 per share Total raised: $874M Analysts stick to "outperform" stock rating 35 Lending in India shifts from consumer to SMBs VC-backed lending deals in Asia move out of China to developing nations in Q2'18 Q2'18 India Alternative Lending: 6 deals worth $53.6M All focused on SMBs 5 were early-stage deals Amazon lead the top deal to Capital Float, a $22M Series C-II Amazon is targeting merchant lending to grow in India 36 MACROS SECTOR TRENDS G L O B AL V C - B AC KED F IN T E C H Q 2 ' 1 8 INSURANCE 37 Insurance tech deals and funding dip in Q2'18 Global VC-backed insurance tech financing trends, Q2'17 Q2'18, ($M) $615 $240 $532 $662 $468 43 32 36 43 37 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 38 Europe sees more early-stage insurance tech deals Q2'18 saw 8 insurtech deals worth $192M in Europe, 6 were early-stage deals 39 Startups look to change the life insurance buying experience in the US Select H1'18 Life Insurtech deals Focus: Term life insurance Coverage: Up to $8M (Re)insurance partners: Hannover Re, Fidelity Security H1'18 Funding: $40M Series B Select Investors: RRE, Canaan Partners, Allianz Life Ventures, Northwestern Mutual Future Ventures Focus: Term life insurance Coverage: Up to $10M (Re)insurance partners: Assurity, Munich Re, RGAx H1'18 Funding: $11.5M Series A Select Investors: Sequoia Capital, Downey Ventures, Roc Nation, Durant Company Focus: Accidental death and term life insurance Coverage: Up to $5M (Re)insurance partners: Vantis Life, RGAx H1'18 Funding: $10M Series A Select Investors: Bessemer Venture Partners Focus: Term life insurance Coverage: Up to $500K (Re)insurance partners: North American Company for Life & Health, Munich Re H1'18 Funding: $15M Series A Select Investors: Valar Ventures, Core Innovation Capital, NEA 40 MACROS SECTOR TRENDS G L O B AL V C - B AC KED F IN T E C H Q 2 ' 1 8 PAYMENTS/ BILLING 41 Adyen makes record public debut in Europe Netherlands-based payments processor Adyen saw shares jump 98% is 1st day of trading I N S U R G E N T P A Y M E N T P R O V I D E R S W A N T T H E I N D U S T R Y T O ' S T A R T O V E R A G A I N ' 42 PayPal's $3B acquisition spree *Note: PayPal also acquired Simility & Jetlore in Q2'18; both are non-fintech companies. W H I L E C O M P E T I T I O N F R O M P A Y M E N T S I N C U M B E N T S H E A T S U P Recent deals by PayPal highlight their focus on in- store retail and marketplace enablement. MAY 2018 MAY 2018 JUNE 2018 Corporate minority in India-based Pine Labs, a cloud-based unified payments interface (UPI) & PoS Acquisition of iZettle for $2.2B for their in-store PoS technology operating in 50K business in Europe, as well as Brazil & Mexico Acquisition of HyperWallet, a payout network to pay earnings, commissions, or merchants ($400M valuation) Jul'18 // $104.5B Market Cap 43 Payment networks look to grow partnerships and secure a foothold in emerging markets Focus: Contactless payments hardware and software provider that can be integrated at both merchant & customer interaction points Key Product: PoS hardware, card readers, mobile bank & wallet Numbers: 50M consumers, 25,000 Retail Pods in India Jun'18 // $8M Series A Select Investors: Mastercard, Amazon Focus: Digital financial services & payments intermediary Key Product: Digital & card-not-present payments processor Numbers: 6.6M MAU, 480M digital transactions annually, 400K merchants supported, across 6 LatAm countries Jun'18 // $7M Series A Select Investors: Visa 44 And for next-gen credit & debit cards Select startups & respective payments network partner VS. 45 MACROS SECTOR TRENDS G L O B AL V C - B AC KED F IN T E C H Q 2 ' 1 8 PERSONAL FINANCE 46 Fintech business lines are blurring as bank accounts become the new battleground U N U S U A L S U S P E C T S A R E L O O K I N G T O B A N K A C C O U N T P R O D U C T S 47 Acorns grows to 3.7M customers & $1B in AUM A C O R N S I S A C T I V E L Y P U R S U I N G O M N I - C H A N N E L S T R A T E G Y T O D I V E R S I F Y O F F E R I N G A C O R N S S P E N D A C O R N S G R O W Debit Cards 175,000 signups since July'18 Target launch Nov'18 Retirement Savings 350,000 signups since April'18 May'18 // $50M Series E Select Investors: Blackrock, Bain, Nyca, Sound Ventures, Point 72, Paypal, Greycroft, e.Ventures Q2'18 announcements: Acorns Grow, a retirement savings account through acquisition company Vault launched IRA, Roth IRA, and SEP retirement accounts Acorns Spend, a debit cards that rewards spending with investment contributions Acorns is exploring adding more active investments and potential 401(k) partners S E L E C T P A R T N E R S H I P S Acquired by GS Q2'18 May'18 Nov'17 Feb'18 48 Digital banking startups in US add funding US-based startups raise funding in Q2'18 to build products as European challengers look stateside. Last Funding $29.7M Series B // New York (Stockholm) Select Investors Anthemis Group, Entre Capital, SEB Private Equity, Northzone Ventures Qapital was first a PFM app focused on goals- based saving that uses IFTTT (If This Then That) recipes to prompt behavioral changes to achieve savings goals. Now, they offer Visa debit cards & look to launch robo-investment in 2019. In April'18 they reported having 420K users that have saved $500M. Crosslink Capital, Forerunner Ventures, Menlo Ventures, Northwestern Mutual Capital, Omidyar Network, Homebrew Last Funding $70M Series C // San Francisco Valuation $500M Chime is a mobile banking app that provides a checking account-like service through a partnership with Bancorp, debit cards through Visa, and optional round ups Savings Accounts. In May'18, Chime crossed 1M accounts. Select Investors 49 MACROS SECTOR TRENDS G L O B AL V C - B AC KED F IN T E C H Q 2 ' 1 8 WEALTH MANAGEMENT 50 Wealth tech deals on track to surpass 2017 Global wealth tech VC-backed fintech financing trends, Q2'17 Q2'18, ($M) $551 $321 $211 $567 $758 27 27 23 34 28 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 51 Early startups gained an edge by undercutting incumbents with competitive & transparent fees VS. Management Fees 0.25%; first $10,000 is managed free 0.25% to 0.40%, depending on plan Trading Fees $0 $0 Management Fees 0.35% 0.25% to 0.50% Trading Fees $6.95 $6.95 $4.95 $4.95 52 Starting in August, investors using Vanguard's online brokerage will be able to trade ETFs on a commission-free basis. Vanguard supports nearly 1,800 ETFs of the roughly 2,000 in the market from 100 ETF providers including from rivals iShares, Schwab and State Street Global Advisor. Why does it matter?: Millennials love ETFs more so than older investors and with so much interest and competition from fintech in ETFs, Vanguard, Schwab, & Fidelity are slashing fees to compete and acquire millennial customers. Vanguard Group eliminates trading fees on almost all ETFs including funds from most of its rivals July 2, 2018 53 Advisor tech focuses on AUM over millennials Select Q2'18 investments: Focus: Risk management, portfolio tracking, and advisory platform including Stratifi's PRISM risk rating. Stratifi integrates with several major brokerages including TD & Fidelity. Q2'18 Funding: $7M Series A Select Investors: Khosla Ventures, Anthemis Group Focus: Institutional multi-asset class portfolio management and reporting solution for pension, endowments, foundations, OCIOs, and family offices. In May'18 Solovis partnered AcordIQ to expand PE services Q2'18 Funding: $8M Series A Select Investors: Edison Partners, FINTOP Capital 54 MACROS SECTOR TRENDS G L O B AL V C - B AC KED F IN T E C H Q 2 ' 1 8 BLOCKCHAIN 55 Pure-play ICOs still losing funding momentum Sources: CB Insights, TokenData. $648 $460 $329 $775 $857 $816 $1,223 $1,675 $1,214 $701 $580 $994 $4,234 $850 $850 35 30 62 98 148 133 215 175 120 169 129 106 10 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Disclosed funding of completed ICOs (and Telegram's private sale). June 2017 June 2018 (YTD) Total Completed ICOs Total ICO Disclosed Raised ($M) Telegram Private Sale ($M) EOS ($M) (year-long ICO) 56 Blockchain fintech hits 5-quarter high in Q2'18 Global VC-backed blockchain fintech financing trends, Q2'17 Q2'18, ($M) Note: Blockchain investments outside of financial services-related applications are not included in this data $188 $158 $300 $179 $633 18 21 28 37 51 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 57 M&A activity in crypto space heats up May'18 // $165M Series D Select Investors: Accel, Breyer Capital, General Catalyst, Blockchain Capital, Digital Currency Group In Feb'18 Circle acquired crypto exchange Poloniex ($400M valuation) In Jan'18 the OTC crypto trading business' monthly trading volume was ~$2B $3.2B Valuation H1'18 Acquisitions Acquires In June, Stellar, a blockchain protocol for building financial products, reportedly acquired San Francisco-based Chain for $500M paid in Stellar's digital currency XLM. Chain provides blockchain technology for the financial industry and had previously raised more than $43M from investors including Khosla Ventures, RRE Ventures, Pantera Capital, Citi Ventures, and Nasdaq. In addition to launching a venture arm, Coinbase made 7 acquisitions in H1'18 including Keystone Capital, a FINRA-registered broker-dealer that operates as an alternative trading system. The acquisition will allow Coinbase to sell cryptocurrency tokens that are deemed securities. H1'18 acquisitions: Acquires Q2'18 announcements: 58 Fintech insurgents look to tap into crypto's viral growth *Rounds not included in blockchain Q2'18 funding total B L U R R E D L I N E S 1 3 1 1 17-Dec 18-Jan Users before crypto Users added since crypto Date of crypto feature launch: 4M 2M May'18 // $363M* Series D Select Investors: DST, Index Ventures Q2'18 announcements: Grew 1M customers following crypto exchange launch Applied for BitLicense to set up NY operations and is in 17 other states In July'18 they added Litecoin, Dogecoin, and Bitcoin Cash $5.6B Valuation Apr'18 // $250M* Series C Select Investors: DST, Index Ventures, Ribbit Capital, Kleiner Perkins, capitalG Q2'18 announcements: Added 1M users with crypto launch Broke even & grew headcount Announced plans to add commission-free stock trading $1.7B Valuation 59 MACROS SECTOR TRENDS G L O B AL V C - B AC KED F IN T E C H Q 2 ' 1 8 CAPITAL MARKETS 60 $872 $675 $555 $1,131 $1,569 51 47 44 60 42 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Capital markets tech funding grows, but deals drop to five-quarter low Global capital markets tech VC-backed fintech financing trends, Q2'17 Q2'18, ($M) 61 Dataminr is a B2B data analytics suite of modular desktop and API applications that leverage social media and public market data sets to detect events, consumer signals, and alert customers. Dataminr for Finance is used by hedge funds and investment banks to act on market information and gain context from nontraditional sources. T H E F I R S T A L T E R N A T I V E D A T A U N I C O R N F O R F R O N T O F F I C E S A L E S A N D T R A D I N G Last Funding $392M Series E // Jun'18 S E L E C T F I N S E R V I C E S I N V E S T O R S Valuation $1.2 - $1.6B 62 Institutional-grade crypto vehicles target the street Focus: Institutional clearing & trading platform for digital currency swaps and options contracts. Key Product: Bitcoin savings accounts that earns interest through "call overwrites" on options (pictured above). Numbers: $7.5M weekly trade volume, 700 swaps and options contracts, 90 individual & institutional traders. Apr'18 // $8.37M Series A Select Investors: FundersClub, Lightspeed, Google Focus: Trade finance platform utilizing open-source blockchain that today offers receivables discounting, factoring, and payment commitment. Key Product: Marco Polo, a platform for open account trade that was developed with R3 and 10 international banks. Jun'18 // $16M Seed Select Investors: BNP Paribas, ING Ventures 63 I N V E S T O R S P O T L I G H T : Incumbent Fintech Investing Update 64 Top US banks make strategic bets that align with core initiatives In Q2'18, Goldman Sachs invested $40M in Series E financing to customized payment card company Marqeta. A partnership could allow Marcus to offer an Affirm-style POS lending service. JP Morgan participated in a $54M Series E investment in Q2'18 to payments hardware provider TouchBistro. The two partnered as part of the deal, suggesting Chase Pay is looking to grow its retail presence. 65 Top US banks make strategic bets that align with core initiatives Goldman focuses building out retail banking arm Marcus. JP Morgan remains focused on payments and recently launched their digital bank app Finn. In H1'18 both Goldman Sachs and JP Morgan saw Kensho exit their portfolios. The company was acquired by S&P at a reported $550M valuation. 8 R E T A I L B A N K I N G 5 P A Y M E N T S VS. 66 European banks keep up investing pace in Q2'18 and see big exit In Q2'18, Santander was among one of the investors in iZettle which was acquired by Paypal for $2.2B. Santander and HSBC have both invested in recent unicorn Tradeshift. 67 European banks are challenging back In H1'18, competition between high street banks and well-funded challengers continued to heat up. While incumbents look to boost their digital capabilities, challenger banks are growing market share and their global footprint. Fresh off mega-round ($100M+) investments in H1'18, N26 and Revolut continued to build out their US operations. VS. 1 M C L I E N T S 2 M C L I E N T S 7 5 0 K C L I E N T S Santander latest traditional player to open digital bank May 15, 2018 | 68 Top banks continue to pick off fintechs in Q2'18 Fintech acquisitions between 2013 Q2'18 April'18 Goldman closed its' acquisition of Clarity Money, adding a potential 1M customers to its digital finance unit Marcus. 69 VC-backed fintech regional trends A P P E N D I X Q 2 ' 1 8 : 70 $16.07 BILLION 133 DEALS A S I A F I N T E C H V C - B A C K E D E Q U I T Y F U N D I N G I N Q 2 ' 1 8 : A C R O S S 71 Asia sees record for fintech deals and funding Deals to VC-backed fintech companies in Asia grew 41% & funding was flat quarter-over-quarter $2.8 $1.4 $0.7 $2 $2 91 90 80 94 133 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 $14 Series C ($15B Valuation) 72 $3.2 BILLION 146 DEALS U S F I N T E C H V C - B A C K E D E Q U I T Y F U N D I N G I N Q 2 ' 1 8 : A C R O S S 73 $2.1 $2.0 $2.3 $2.1 $3.2 117 125 113 157 146 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Amount ($B) Deals US fintech funding hit a 5-quarter high in Q2'18 US VC-backed fintech financing trends, Q2'17 Q2'18, ($M) US financing saw a boost from 6 mega-rounds worth $1.39B After a dip in Q1'18, funding in the US came roaring back and topped a new quarterly record with $3.2B. The US saw Dataminr, Tradeshift, & Circle join the unicorn club and GreenSky exit in Q2'18 Early-stage deals also hit a new record raising $532M across 72 deals. 74 $852 MILLION 72 DEALS E U R O P E F I N T E C H V C - B A C K E D E Q U I T Y F U N D I N G I N Q 2 ' 1 8 : A C R O S S 75 $522 $496 $903 $1,065 $852 72 68 77 69 72 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Despite the dip in funding, deals in Europe jumped driven by a fresh crop of early-stage fintechs 76 CVC participation Europe fintech hit a 5-quarter high CVC participation in Europe VC-backed fintech, Q2'17 Q2'18, ($M) CVC activity in European fintech hits quarterly high Corporates and their venture arms (CVCs) participated in 26 fintech investments worth $343M in funding in Q2'18. In particular, Allianz X has been active in large fintech deals to European startups including MoneyFarm, N26, and Simplesurance in H1'18. 32% 26% 24% 31% 23% 36% 68% 74% 76% 69% 77% 64% Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Corp / CVC Participation Other Investors #AhaCBI Q2'18 Exits: M&A + IPOs 78 $1.9B CHINA INDIA SWEDEN ASIA IPOs in Q2'18 Global VC-backed fintech companies with a private market valuation of $1B+ as of Q1'2018 $1.79B $1.3B $1B Valuation $1.46B $1B $18.5B $7B $1.6B Valuation $2.5B $1.56B $1.24B $1B $1.2B $9.2B $1B $2B (as of Q2'15) $3.2B $4.5B $4B $1B $1B - $2B BRAZIL SOUTH AMERICA $1.1B Valuation $3.6B UNITED STATES UNITED KINGDOM NETHERLANDS EUROPE $2.3B $1B NORTH AMERICA GreenSky stock rises after several analysts initiate coverage with bullish ratings June 18, 2018 | 79 15 23 31 30 40 39 4 3 3 2 3 7 H1'13 H1'14 H1'15 H1'16 H1'17 H1'18 M&A IPO H1'18 saw more than 2x the amount of fintech IPOs as H1'17 80 Methodology CB Insights encourages you to review the methodology and definitions employed to better understand the numbers presented in this report. If you have any questions about the definitions or methodological principles used, we encourage you to reach out to CB Insights directly. Additionally, if you feel your firm has been under-represented, please send an email to info@cbinsights.com and we can work together to ensure your firm's investment data is up to date. What is included: What is excluded: Equity financings into emerging fintech companies. Fundings must be put into VC-backed companies, which are defined as companies who have received funding at any point from venture capital firms, corporate venture groups, or super angel investors. Fundings of only private companies. Funding rounds raised by public companies of any kind on any exchange (including Pink Sheets) are excluded from our numbers, even if they received investment by a venture firm(s). Note: For the purposes of this analysis, JD.com's finance arm JD Finance and its $1B financing were included in the data per its investment from Sequoia Capital China in Q1'16. Only includes the investment made in the quarter for tranched investments. If a company does a second closing of its Series B round for $5M and previously had closed $2M in a prior quarter, only the $5M is reflected in our results. Round numbers reflect what has closed not what is intended. If a company indicates the closing of $5M out of a desired raise of $15M, our numbers reflect only the amount which has closed. Only verifiable fundings are included. Fundings are verified via various federal and state regulatory filings, direct confirmation with firm or investor, or press release. Previous quarterly VC reports issued by CBI have exclusively included VC-backed rounds. In this report, any rounds raised by VC-backed companies are included, with the exceptions listed. No contingent funding. If a company receives a commitment for $20M subject to hitting certain milestones but first gets $8M, only the $8M is included in our data. No business development / R&D arrangements, whether transferable into equity now, later, or never. If a company signs a $300M R&D partnership with a larger corporation, this is not equity financing, nor is it from a venture capital firm. As a result, it is not included. No buyouts, consolidations, and/or recapitalizations. All three of these transaction types are commonly employed by private equity firms and are tracked by CB Insights. However, they are excluded for the purposes of this report. No private placements. These investments, also known as PIPEs (Private Investment in Public Equities), are excluded even if made by a venture capital firm(s). No debt / loans of any kind (except convertible notes). Venture debt or any kind of debt / loan issued to emerging startup companies, even if included as an additional part of an equity financing, is not included. If a company receives $3M with $2M from venture investors and $1M in debt, only the $2M is included. No government funding. Grants, loans, or equity financings by the federal government, state agencies, or public-private partnerships to emerging startup companies are not included. 81 The CB Insights platform has the details on all the data included in this report W H E R E I S A L L T H I S D A T A F R O M ? CLICK HERE TO SIGN UP FOR FREE
