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2 Highest Valued FinTech Investments That Shaped the Industry

2020 was a challenging year for most industries, and FinTech was no exception. Impressively enough, global investment in fintech bounced back strongly in the first half of this year, hitting an astronomical $98 billion with a record number of deals. So what are the largest fintech investments deals, and how did FinTech manage to bounce back so quickly?

Following a sticky Covid-19-hit, investments in the first half of 2021 was up $12 billion from the same period the previous year, with deal volume hitting a record of nearly 2500 deals, surpassing the previous record of 2390 in 2018. Proving that FinTechs are capitalizing on the spike in eCommerce and digitalisation following the outbreak of the pandemic

The Top 2 Venture Capital Investment Rounds in 2021

The largest VC rounds in 2021 include Robinhood with $3.4 billion, and Klarna which signifies the attractiveness of both the lending and stock trading sectors.

1- Robinhood

To say that Robin Hood has been faring off well leading up to it's massive $2.4 billion investment in February might be an understatement, and we can clearly see that by looking at their quarterly revenue trend. 

Quarterly revenue trend of Robinhood.
Quarterly revenue trend of Robinhood. Source: vested

Aside from receiving 2 out of the 5 highest fintech investments in 2021, it appears that the stock trading app has been dominating the crypto and stock trading apps for 4 years in a row, with the app surpassing 3 million monthly downloads. Additionally Robinhood experienced major adoption surges in the first two quarters of 2021, 

2- Klarna

Next on the list of the highest fintech fundings list is Klarna, the infamous and fierce buy now pay later solution provider secured $1 billion only in the first half of 2021.  Not so surprisingly, Klarna surpassed its direct competitors by 4 million downloads in December of last year, and is also among the top 10 most downloaded shopping apps.

The Drivers Behind The Surge in FinTech Investments

Following the outbreak of the pandemic, investment budgets were slashed in most industries. But not so much in fintech since Investors have retained their confidence in the sector. The industry's maintained growth and consolidation might just be the biggest drivers behind this retained confidence. 

Surprisingly, although Brexit seems to have contributed to a 9% year-over-year drop in funding, the UK retained its position as the number 1 destination for FinTech investment in Europe. 

Not to mention that consolidation has been an ongoing theme in the industry, and the aftermath of the pandemic further fueled this trend.

The accelerated pace of digitalization we saw in every aspect of our personal and business lives, is another reason why the FinTech industry as a whole has continued to attract investors. As most of our activity defaulted to remote, FinTechs that cater to this new paradigm saw immense growth.

In Europe alone, FinTech app-usage grew by 72% in the direct aftermath of the pandemic outbreak, while the top seven digital banks in the US grew their cumulative user base by 39%. 

Since the start of the pandemic, the fintech industry had an impressive rebounce. Going forward, with the growing size of fundings, regulators are likely to impose investment restrictions– which could somewhat hinder the pace of consolidation.

However, the industry seems to be ahead of the game, with some players focusing on incremental investment in their strategic partners that are more likely to get the green light from regulators. 

Visa’s strategic investment in Klarna is a great example many other legacy players could try and emulate, as they strive to maintain their stronghold over the industry.

Aside from the stock trading and lending sectors, which sector do you think will likely undergo massive growth in the rest of 2021 and beyond?

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