Fintech Pathfinder 2023

The Most Promising Fintech Startups Pathfinder 2023

Foreword

Who will be who?

Welcome to the Fintech Pathfinder, an interactive database of fintech start up companies that has been compiled since mid-2021 by Financial IT’s research team.

Saving time and money

The database serves several functions.

Most obviously it seeks to make it cheap and easy for subscribers to find out key details about emerging fintech companies around the world. Specifically, the Fintech Pathfinder identifies for each company:

The timing and the amount of the latest funding round

Total funding received from Venture Capital (VC) funds and other ‘angel’ investors since its establishment

The number and  identities of the lead investors

The total number of investors

Estimated overall valuation of the company

The contact details (e-mail, website and LinkedIn page)

The year in which it was founded

The city where it is based

The broad line of business in which the company is active

The company’s own description of itself

Its size in terms of number of employees

Its estimated annual revenue

The number and names of the founders

Its funding stage

The total number of funding rounds.

Identifying where the action will be

As we explain in the description of the methodology, the Fintech Pathfinder only includes companies that meet certain criteria. Of these criteria the most important are that the company is unlisted and that it is no more than 10 years old.

Of particular importance are the funding rounds that have taken place in the last two years.  How much has been raised in each of the various rounds that may have taken place? What has been the period between the various rounds? How large is the funding relative to the appraised overall valuation of the company?

Other things being equal, a company that has completed several funding rounds in rapid succession, and which has raised sums that are substantial relative to the assessed value, is one where the investors and the managers perceive that there are good opportunities for the company in the coming two years or so.

Conversely, a company that has not completed any funding rounds in the last two years may be one where opportunities are seen as being less exciting.

A company that is in the first group is, therefore, one that may evolve and grow rapidly over the coming two years. At very least, it is very probably a fintech to watch.

The mainstream and financial media do a good job of discussing fintech companies that have become substantial and (usually) listed businesses.

The rankings that can be produced from the Fintech Pathfinder show whereaccording to insiders - the action is most likely to take place in the future.

The Fintech Pathfinder is not really about the question, within the world of fintech, of Who is Who? It deals with the question of Who will be Who?

Methodology

Highlighting the names that people don’t know…yet

Defining the universe

Fintech is - obviously - a portmanteau of Finance and Technology. It is frequently used to refer to new(ish) companies that use technology to perform the functions that would previously have been undertaken by an established bank, insurance company or other financial institution. Typically, the idea is that the technology provides the new company with a competitive edge in terms of lower cost, greater flexibility, innovative distribution, attractive product or whatever.  The new companies, usually with some reason, are often described as being ‘challengers’ or ‘disruptors’.

However, it is wrong to think of fintech companies as being naturally and automatically in competition with incumbent players. Frequently, the fintechs are developing or providing technology that can be used by the established companies.

Major consulting firms - and others - have done a good job of defining the size of the universe of fintech and identifying transactions that have taken place. For instance, KPMG’s latest Pulse of Fintech report, which was published in February 2023, suggests that total investment in fintech (including situations where companies are listed) over the course of last year amounted to $164.1bn. There were 6,006 deals, of which 5,136 involved investment by VC funds. VC investment in fintech in 2022 amounted to $80.5bn, or almost half of the total: much of the remainder was accounted for by merger and acquisition (M&A) activity.

Following the money

Th basic assumption that is mad in th compilation of th databas is that th manag rs of and th inv stors in th fint ch compani s hav th b st und rstanding of th compani s prosp cts

If a funding round has b n compl t d in th last two y ars, that is a good sign

If a funding round in th last two y ars has b n follow d rapidly by anoth r funding round, that is an additional good sign

If th amounts rais d in th funding round(s) ar substantial r lativ to th ass ss d valu of th fint ch company, that is a particularly good sign. [NB th ov rall valuations of th fint ch compani s in th Fint ch Pathfind r sampl can g n rally b inf rr d from public comm nts mad at th tim of th funding round(s). In som instanc s, it has b n n c ssary for our r s arch rs to inf r th valuations using oth r m thods.]

Ev ry ranking that is produc d from th databas will cl arly id ntify what it shows.  Most commonly, th rankings will id ntify thos compani s that hav compl t d at l ast on funding round in th last two y ars and wh r th amount(s) rais d ar substantial r lativ to th ass ss d valu of th company.

Th compani s in th Fint ch Pathfind r databas ar div rs in t rms of th ar as in which th y op rat . As of May 2023, th numb rs of compani s in th databas w r as follows:

Global Fintech Market at Glance

The importance of fintech startups stems from their ability to disrupt traditional financial services and offer consumers more accessible, affordable, and convenient financial products and services.

The global fintech investment took a dip in 2022, decreasing from the previous year's record high of $238.9 billion invested across 7,321 deals to $164.1 billion invested across 6,006 deals in 2022. Despite this, some areas of the fintech sector showed resilience. The payments sector remained the strongest area of fintech investment globally, with $53.1 billion invested compared to $57.1 billion in 2021. Regtech was the only sector to experience growth, with investment in the space rising from $11.8 billion in 2021 to a record $18.6 billion in 2022. However, investment in crypto and blockchain experienced a decline, falling from $30 billion in 2021 to $23.1 billion in 2022, with a particularly sharp drop in the second half of the year following increased scrutiny in the space.

The decrease in global fintech investment was also evident in the drop in M&A deal value from $105.1 billion in 2021 to $73.9 billion in 2022, and global VC investment declining from $122.9 billion to $80.5 billion year-over-year. However, PE growth investment fell less sharply, decreasing from almost $11 billion in 2021 to $9.7 billion in

1https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2023/02/pulse-of-fintech-h2-22-web-file.pdf

2 https://kpmg.com/ie/en/home/insights/2023/03/fintech-investment-down-by-over-a-third-in-2022.html

2022. Geographically, the Americas attracted $68.6 billion across 2,786 deals in 2022, with the US accounting for $61.6 billion across 2,222 deals, while the Asia-Pacific region attracted $50.5 billion across 1,227 deals, and EMEA attracted $44.9 billion across 1,977 deals.

Although the outlook for fintech investment in H1'2023 is subdued, there is optimism heading into the new year. The report suggests that investors will opt for safer investments, leading to rising M&As among established, larger organisations. Although corporate-participating VC investment globally fell from $62.8 billion in 2021 to $39.6 billion in 2022, the median deal size rose for angel and seed-stage deals (from $1.8 million in 2021 to $2.4 million in 2022) and early-stage VC deals (from $5.75 million to $6 million), while falling for laterstage VC deals (from $15 million to $13.9 million).

Despite the decline in investment, experts in the industry remain optimistic about the future of fintech. While the decrease in investment may indicate a slowing down of the sector, it is important to note that fintech is still a growing market with significant potential. Additionally, the pandemic has accelerated the adoption of digital payments and other fintech services, making the industry more relevant than ever. Therefore, many experts predict that fintech will continue to be a hub of innovation and investment in the years to come.

https://www.zawya.com/en/business/fintech/fintech-investment-in-emea-drops-sharply-to-449bln-in-2022-gqogn

https://assets.kpmg.com/content/dam/kpmg/sg/pdf/2022/09/pulse-of-fintech-h1-22-updated.pdf

Source: Statista

Revenue of fintech industry worldwide from 2017 to 2027

Global Startup Pathfinder Map

Demographics

The financial technology (fintech) industry has brought about a revolution in the way we manage our finances and access financial services. Driven by technological advancements and increasing demand for innovative solutions, the fintech industry has been experiencing rapid growth globally in recent years. The current section demonstrates continents and countries that are leading the fintech innovation race, with a particular focus on the number of startups in each market. This section explores the distinct strengths and opportunities of each market, ranging from established fintech hubs such as the United States and the United Kingdom, to emerging markets like India and China, and what sets them apart from one another in the global fintech landscape.

Top Industries

The rise of fintech has led to the emergence of various sub-sectors, each with its own unique set of challenges and opportunities. This section will delve into the top 10 fintech segments that are shaping the global financial landscape.

Top 10 Industries

Global Startup Pathfinder Map

100 Most Promising Startups

In addition to our 2023 Fintech Ranking lists, there have also been identified the year's breakthrough companies. These companies demonstrate how even small steps into the fintech market with minimal funding can lead to significant success. Rather than focusing solely on valuation, there was  consideration of the difference between the first funding round and the most recent one, with a short period of time between them. Financial IT Pathfinder: Year's Highlights section acknowledges the efforts and contributions made by these companies

The Most Promising Fintech

JPMorgan Partners (JPMP), Banking Competition Remedies, Tiger Global Management, American Express Ventures, PayPal Ventures, Capability and Innovation Fund, Index Ventures

The Most Promising Fintech Startups Pathfinder 2023

The Most Promising Fintech

FIS Impact Ventures, PayPal Ventures, Highland Europe, Capability and Innovation Fund, Blenheim Chalcot, Frog Capital, Blenheim

Kohlberg Kravis Roberts, GGV Capital, Mandiri Capital Indonesia (MCI), MDI Ventures, Telkomsel Mitra Inovasi, Indigo by Telkom Indonesia

Beams FinTech Fund, Creation Investments Capital Management, LLC, Tiger Global Management, Stride Ventures, Sequoia Capital India, growX ventures

M13,

The Most Promising Fintech Startups Pathfinder 2023

Top Europe 2023

Europe holds the position of the birthplace of fintech, primarily due to its global leadership in financial institutions and marketplaces. Fintech startups in Europe boast twice the value of any other tech sector.

The database comprises around 800 fintech companies in Europe itself, with 330 based in the UK, 96 in Germany, 66 in France, and 55 in Switzerland.

The UK

The UK fintech startup landscape has been thriving in recent years, with numerous startups and established companies alike leading the way in innovation and technological advancements in financial services. The UK fintech sector attracted a record-breaking US $5.3 billion in investment in 2020, despite the challenges posed by the COVID-19 pandemic. Despite a difficult global market, the UK has demonstrated its strength as a leading location for investment in FinTech, with $12.5 billion of FinTech venture capital investment received in 2022. And $8.9 billion of this amount was invested during the first half of 2022. However, the total investment for the full year reflects an 8% decline from 2021, when UK FinTech investments reached a record high of $13.5 billion.

One notable trend in the UK fintech startup landscape is the rise of challenger banks, such as Monzo, Starling, and Revolut. These companies have disrupted traditional banking models by offering mobile-first, user-friendly banking services with no fees or minimum balances.  Another area of growth in the UK fintech startup landscape is in the insurance sector, with insurtech startups such as Zego and Honcho offering innovative solutions to traditional insurance challenges. The UK fintech startup landscape has also seen a rise in companies focused on sustainable finance, with startups such as Chip and Plum offering ethical investment options and carbon offsetting services.

https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2023/02/pulse-of-fintech-h2-22-web-file.pdf

Overall, the UK fintech startup landscape is a dynamic and innovative ecosystem that continues to attract significant investment and produce groundbreaking solutions to traditional financial challenges. With the support of the UK government and a highly skilled workforce, it is likely that the UK fintech sector will continue to thrive in the years to come.

, British Business Investments, Atalaya Capital, Warwick Capital LLP

JPMorgan Partners (JPMP), Banking Competition Remedies, Tiger Global Management, American Express Ventures, PayPal Ventures, Capability and Innovation Fund, Index Ventures United Kingdom / Europe

General Atlantic, FIS Impact Ventures, PayPal Ventures, Highland Europe, Capability and Innovation Fund, Blenheim Chalcot, Frog Capital, Blenheim Chalcot

Bristol, City of, United Kingdom

Amazon, SOFTBANK Latin America Ventures, Headline, Redpoint eventures United Kingdom / Europe

EQT Ventures, TriplePoint Capital, Balderton Capital, LocalGlobe United Kingdom / Europe

United Kingdom / Europe

f

Lakestar, Mouro Capital, Global Founders Capital

TransUnion, TDR Capital, Goldman Sachs, HSBC, Banco Sabadell, Outward VC

United Kingdom / Europe

United Kingdom / Europe

United Kingdom / Europe

Growth, Accel, Balderton Capital, Seedcamp

Dai-ichi Life, Target Global, Creandum, LocalGlobe

Temasek Holdings, Battery Ventures, Dawn Capital, Silicon Valley Bank, Accel

WestCap, Blumberg Capital, Maverick Ventures Israel, Target Global, Rhodium

Top North America

North America is a region with a thriving fintech industry and a significant amount of investment flows. In H1’21, Canadian fintechs attracted a record $4.8b investments, while USA-based fintech companies raised over $25b from VCs. In the first half of 2022, fintech investment in the Americas amounted to $39.4 billion, which is a decrease from the $59.7 billion seen in the second half of 2021. Despite the decrease in quarterly investment to $22.7 billion, the fintech market in the region remained robust, with 806 deals recorded in Q1'22, indicating a strong start to the year.

Based on observations, the United States is likely to dominate the fintech industry within the next five to six years. Until mid-2022, the expansion of the North American market was primarily attributable to construction projects. After the scandalous collapse of FTX, the majority of tokens lost value, prompting cryptos to close their doors. Nevertheless, open banking, paytech, lending/ credit, and regtech will continue to evolve. However, many of the startups in the database and some in the list below will see their valuations challenged during 2023, and the number of new entrants will lessen across the board, including this region.

The following 30 most promising fintech businesses (20 from the USA, 10 from Canada) in the North American region have been selected based on their innovation, growth potential, and financial performance.

6https://kpmg.com/xx/en/home/insights/2021/08/pulse-of-fintech-h1-2021-americas.html

https://kpmg.com/xx/en/home/insights/2022/08/pulse-of-fintech-h1-22-americas.html

THE REST OF EUROPE

The Most Promising Latin America 2023

Latin America is a rapidly growing region with a dynamic fintech industry that has been gaining traction in recent years. With the increasing adoption of digital technologies and the growing demand for financial services, the fintech market in Latin America is poised for significant growth. As a result, the region has become a hotbed for fintech innovation, with numerous startups and established companies offering a range of innovative products and services.However, the Latin American region witnessed a decline of 58% in FinTech investment in 2022, as it reached $5.4 billion, as compared to the previous year. Additionally, the number of deals recorded was 341, which was 15% less than that of 2021. Among the countries in Latin America, Brazil was the most active, with 134 deals announced, representing a 39% share of the total FinTech deals in the region.

PayTechs, Open Banking, Lending/Credit, and InsurTech are some of the most popular fintech solutions in Latin America. However, their valuations are expected to face challenges in 2023, and the number of new entrants in the region is expected to decline.

A list of 25 of the most promising fintech businesses in the Latin America region has been compiled. Some of the selected startups include Vexi, Ali Credito, Aplazo, and others.

https://fintech.global/2023/03/15/latin-american-fintech-investment-suffers-in-2022-declining-58/

The rest of Latin America

The Most Promising Fintechs in Middle East

The fintech industry in the Middle East has been growing rapidly in recent years, driven by the increasing use of digital technologies and the growing demand for financial services. This region is evolving quickly and has the potential for significant growth in the fintech market.

In 2022, there was a decrease in both FinTech investment and deal activity in the Middle East. The region's FinTech investment dropped to $1.37 billion, which is 3.6% less than the previous year. Additionally, Middle Eastern FinTech companies raised 169 deals in 2022, a slight decline of 1.8% from the levels seen in 2021.

The Most Promisin Fintech Startups Pathfinder 2023

The Most Promising Fintechs in Africa

Africa's fintech industry has been attracting a lot of attention from venture capitalists and investors, with news of local startups receiving capital constantly emerging since the beginning of the digital boom in the continent. This reflects a growing interest in building fintech infrastructure in Africa. In 2022, African fintech companies received approximately $900 million in funding from both local and foreign investors, with a quarter of that amount allocated to South

The following 20 fintech businesses have been selected as the most promising in Africa, including Kuda, Yoco, PalmPay, and more.

https://www.zawya.com/en/economy/africa/3-trends-that-will-shape-the-future-of-africas-fintech-startups-pzyfay

The Most Promising Fintechs in Asia

Fintech investment in the Asia-Pacific region reached a record high in 2022, with total investment hitting $50.5 billion across 1,227 deals. This is a slight increase from the $50.2 billion invested across 1,604 deals in 2021. This rise in investment highlights the growing interest of investors in the region's fintech industry, indicating the potential for further growth and development in the sector.

The pandemic has forced people and businesses to move online, thereby creating an impetus for the fintech industry to grow. Analysts predict that the fintech industry in Asia-Pacific will expand rapidly over the next 5 to 10 years, presenting numerous opportunities for growth and investment. Open banking and other regulatory reforms have also paved the way for change in the financial services industry, with third-party providers now being able to access data from former bank customers. Countries like China and India have made significant strides in financial services, while Singapore leads the way in mobile payment solutions, with widespread acceptance across the island.

China

In recent years, rapid growth has been witnessed in the fintech market of China, propelled by increasing mobile usage, and government backing for entrepreneurship and innovation. China has established itself as a global leader in digital payments, with a significant proportion of transactions being conducted through mobile payments. The Chinese fintech sector is diverse, offering services such as mobile payments, online lending, wealth management, and insurance.

https://kpmg.com/au/en/home/insights/2023/02/pulse-of-fintech-h2-2022-apac.html

To support the fintech industry's growth, the regulatory framework has been adjusted to promote innovation and protect consumers and financial stability. Although the market is highly competitive, with several firms competing for a share of the burgeoning market, Chinese fintech firms are increasingly seeking global expansion and collaborating with foreign businesses.

Despite concerns regarding data privacy and security and regulatory ambiguity, the Chinese fintech market is expected to continue its growth trajectory, supported by the country's vast consumer base, advanced technological capabilities, and regulatory environment.

Several venture capital firms invest heavily in China, focusing on startups and emerging businesses in various industries. Among the most active venture capital firms in China are Sequoia Capital China, IDG Capital, Qiming Venture Partners, GGV Capital, Matrix Partners China, and Hillhouse Capital Group.

The Most Promisin Fintech

Zhon din , Guoxin Zhuoyue Venture Capital, Shan hai International Group (SIG), Yunqi Partners, InnoVen Capital, Youzu Interactive, China Creation Ventures (CCV), FREES FUND

E Fund Mana ement Co.,LTD., China SDIC Gaoxin, Xinhu Zhon bao Co Ltd, Fosun International, Insi ma Technolo y, Sunyard

Telstra Ventures, China Growth Capital | CGC,

Capital China

India

Indian fintech startups managed to raise $5.65 billion across 390 funding rounds in 2022. This marks a significant decline of 47% in funding amount and 29% in the number of funding rounds, as compared to the previous year. Despite this decrease, India still ranks as the third-highest funded country in the fintech sector, trailing only behind the US and the UK. The decline in funding can be attributed to the substantial drop in late-stage funding, which fell from $8.3 billion in 2021 to $3.7 billion in 2022, representing a decline of 56% . The table below demonstrates the most promising fintech startups in India.

https://financialit.net/news/fintech-startups/tracxn-releases-its-fintech-india-report-2022-total-funding-2022-falls-47

Investment Agency, Northern Arc, Trifecta Capital Advisors, Navi Technologies, iLabs Capital, Sistema Asia Capital, Vertex Ventures, Fosun RZ Capital, Endiya

The Most Promising Fintech Startups

THE REST OF ASIA

MDI Ventures, Triodos Investment Management, Lendable, Quona Capital, Triodos Bank Germany, Saison Capital, EV Growth, Quona Capital, Mandiri

The Most Promising Fintechs in Australasia

In 2022, the fintech sector in Australia received a total of US$30.2 billion in investments, with the largest portion of this amount (US$27.9 billion) coming from the Afterpay-Block deal. However, there was a decline in overall deal volume in the latter part of the year. Excluding the Afterpay-Block transaction, the fintech investment in Australia would have decreased from US$3.01 billion to US$2.2 billion in 202213.

The table presented below showcases some of the most promising fintech businesses in Australia and New Zealand, including Spriggy, Open, OCR Labs, and others.

https://kpmg.com/au/en/home/media/press-releases/2023/02/number-of-australian-fintech-deals-falls-from-2021