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Venture capital funding to fintech companies keeps falling, data from CB Insights shows.

Why it matters: The continued drying up of funding dollars paints a grim picture for startups operating amid economic headwinds. 

By the numbers: Investment dollars into fintech companies was a meager $12.9 billion in Q3, the data show, compared to $36.1 billion in the year ago period. 

Fintech investments made up 22% of the venture market in the third quarter of 2021. That figure slid to 17% for the same period this year.

Background: Q3 2021 was the second hottest quarter for fintech fundraising on record, with mega-rounds from FTX, Revolut, Chime, Kavak, and Varo Bank.

Now many fintechs, especially consumer-facing ones, are encountering lower investor interest amid rising inflation and following heavy spending to meet Covid demand.

The big picture: Venture capital investments across the board are coming back down to pre-pandemic levels of "normal." Whether it has further to slide is the big question.

1 big thing: Fintech funding flops

The Coterie, a Palo Alto-based liquidity and estate planning firm for startup founders, has raised $40 million in a funding round led by Andreessen Horowitz.

Why it matters: Founders and startup employees are not well-served by the traditional banking sector, which values income over assets when evaluating them for mortgages and other forms of lending. This startup hopes to provide an alternative.

What it does: The Coterie is aimed at founders who have assets tied up in illiquid shares of their own company or other startups they might have invested in.

It gives them opportunities to diversify their wealth by investing in venture capital firms like Coatue Management, Andreessen Horowitz, Tribe Capital and Initialized Capital, as well as private companies like SpaceX and Stripe.

Members will soon be able to get liquidity by borrowing up to $250,000 through its wholly owned subsidiary Coterie Finance LLC.

Finally, the firm provides estate planning and tax optimization services for founders who might have had (or soon have) a liquidity event.

The Coterie claims to already have more than $500 million in assets under management.

Of note: The new round values the firm at more than $100 million and includes backing from Initialized, Pear VC and Google’s Gradient Ventures, as well as DoorDash founder Stanley Tang and AngelList founder Naval Ravikant.

2. The BFD: Estate plans 

Stripe takes steps to prune workforce (Forbes)

Some senior leaders at Stripe, which in early 2021 was valued at $95 billion, have asked managers to start giving lower ratings on performance reviews, Forbes reports.

Fidelity Investments seeks to bulk up its digital assets unit (Bloomberg)

Fidelity is looking to hire 100 more workers for its digital assets operations, per Bloomberg, taking the headcount of the unit to about 500 by the end of the year.

Flourish Ventures launches Africa-focused pre-seed program (Flourish)

The fintech-focused venture capital investor launched Madica, a program for investing in pre-seed companies in Africa. It will seek to back 25-30 entrepreneurs with $200,000 each.

Jifiti, a white label BNPL operator, that recently raised from IKEA, is launching a business-to-business BNPL offering — the one area of BNPL that still appears to be getting some funding.

3. Credit score

Illustration of positive and negative trend lines coming out of center point.

• PhonePe, an Indian digital payments firm backed by Walmart, is in talks to raise $450m to $500m at a $12b valuation with General Atlantic, per MoneyControl. https://axios.link/3CZ1Byx

• Celestia, a blockchain scaling startup, raised $55m led by Bain Capital Crypto and Polychain Capital. Spartan Group, FTX Ventures and Jump Crypto also invested. https://axios.link/3CUt4RU

• Finexio, an Orlando, Fla.-based B2B accounts payables company, raised $35m in Series B funding at a $100m pre-money valuation. Mendon Venture Partners and National Bank Holdings Corp. led, though J.P. Morgan was the largest investor. Other investors include Patriot Financial Partners and Discover. https://axios.link/3TvUXXL

• A fintech focused on Southeast Asia founded by three former executives at Russian online bank Tinkoff raised $16m. https://axios.link/3TPj9nH

• Breezeway, a Boston-based vacation rental property management platform, raised $15m in Series B funding. Catalyst Investors led, and was joined by insider Schooner Capital. www.breezeway.io

• Limit, a Walnut, Calif.-based digital insurance wholesale broker for the cyber market, raised $14.5 million in Series A funding. IA Capital Group led and was joined by American Family Ventures, Indicator Fund, and Material V, Jovono. https://axios.link/3zaDKLn

• Bookkeep, an accounting automation platform, raised $6.6m in funding led by Fin Capital, with participation from existing investors TTV Capital, Argonautic Ventures, Lerer Hippeau, and Haymaker Ventures. https://axios.link/3CNozZs

• Boku, a DeFi yield app created by former Revolut employees, raised $6.5m in seed funding. Lakestar and Connect Ventures led. https://axios.link/3TCBapa

• LuckyTruck, a Cincinnati-based retail platform focused on the trucking insurance market, raised $2.4m in seed extension funding. Candid Insurance Investors led and was joined by Parker Beauchamp of Markd, Draper University Ventures and SiriusPoint. https://axios.link/3TxxgOC

• Super Advisor, a Toronto-based platform for financial advisers, raised C$2m in seed funding from Rhino Ventures. www.superadvisor.ai

• Uplinq Financial Technologies, a Toronto-based credit assessment firm for SMB lenders, raised a $1.25m investment from ATX Venture Partners. www.uplinq.co

• Sightline Payments, a payments firm for the regulated gaming industry, secured strategic investment from J.P. Morgan Payments. Terms were not disclosed. www.sightlinepayments.com

• Achieve, a San Mateo, Calif.-based personal finance startup, secured a $225m debt facility from O’Connor Capital Solutions and an unnamed “multi-trillion-dollar asset manager.” https://axios.link/3F1fNcY

• Bit2Me, a Spanish platform for buying and selling crypto, acquired Dekalabs, a crypto-focused software development studio. https://axios.link/3D1f6xN

• Cross River Bank, an embedded finance infrastructure provider, is partnering with American Express to issue credit cards on behalf of fintechs on the American Express network. www.crossriver.com

• Edge Capital Management, a DeFi-focused hedge fund, has raised two separate funds totaling $66.8 million. https://axios.link/3VHXAHz

4. Deals of the day

• Binance.US has hired former FBI agent BJ Kang as its first head of investigations. https://axios.link/3gsWoaM

• Atom, a U.K.-based challenger bank, named Andrew Marshall as CFO, replacing Atom co-founder David McCarthy. https://axios.link/3sl6H36

• Polly, a SaaS mortgage technology firm, appointed former Ellie Mae CEO Jonathan Corr to its board of directors. polly.io

• Credit Suisse chief compliance officer Rafael Lopez Lorenzo is set to leave the firm in the coming weeks, Bloomberg reports. https://axios.link/3eTOBm4

5. It's personnel

Situational awareness:🍸Meet us IRL! Axios Pro is holding a subscriber-exclusive happy hour tomorrow night in NYC. Space is limited! RSVP now.

 🎙 In the new episode of "How it Happened: Elon Musk vs. Twitter," Sara Fischer examines the challenges at Twitter that Musk could inherit — and how he might tackle them. Subscribe.

October 24, 2022

1 big thing: Fintech funding flops