Fintech Raising Record Money In 2021

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2021 stands to be a big year for fintech companies. According to reports, investors have been quick to back fintech startups in 2021. This is thanks to the broader adoption of digital payment technologies because of the coronavirus pandemic.

Fintech Startups Raising Money at Record Pace

According to the industry analysis site, PitchBook, 2021 has already been a record-setter for fintech funding. With only two weeks of 2021 down, fintech startups have recorded ten deals worth at least $100 million – up from just three last year. PitchBook also notes that from January 11 through January 15, 2021, alone, more than $1.7 billion in fintech startup funding was announced.

Investors Eyeing Digital Payment Platforms

Two of those $100 million-plus deals involve digital payment platforms. Indonesian rideshare and food delivery platform, Grab, and global payment operator, Rapyd, both raised $300 million through rounds of funding. These two examples highlight one of the primary reasons that investors are flocking to fintech companies: digital payments.

Fintech firms are at the forefront of developing innovative digital and contactless payment platforms. The novel coronavirus outbreak and pandemic has supercharged the adoption of contactless payment across the United States. The virus has also helped raise consumer confidence in – and use of – digital payment platforms.

A recent Chase survey highlighted the growing importance of digital payments. Thirty percent of respondents stated they signed up for a peer-to-peer (P2P) platform, like Zelle, within the past six months. And 45% of longer-term users of P2P services say they are using these payment options more often than they did a year ago. The study also highlights a shift toward digital payments because of COVID-19, with 54% of respondents stating they are using digital technology more because of the pandemic.

Will the Hot Start to 2021 Continue for Fintech Startups?

So, what does the fast start to the year mean for the future of fintech funding in 2021? “If you are raising these mega-rounds and investing in massive teams without being thoughtful on how you scale, you could end up with a massive burn, and not grow your top line as fast as you need to sustain it,” says Adrienne Lerner, founder and managing partner at Avid Ventures. “But if markets continue the way they have been continuing, I actually think we will just see more and more mega-rounds with companies biding their time to continue growing and building.”

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About: Cory Santos
Cory Santos

Cory is the senior credit card editor at BestCards, specializing in everything credit card-related. He’s worked extensively with credit cards and other personal finance topics, including nearly five years at BestCards. Cory’s extensive knowledge is an essential part of the BestCards experience, helping readers to live their best financial lives with up-to-date insights and comprehensive coverage of all facets of the credit card space, including market trends, rewards guides, credit advice, and comprehensive credit card reviews.

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