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Research Brief

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Bitcoin Startup Investment Continues to Hit New Records

Disaggregation of a Bank Startups Raise Nearly $600M in the


Last Year

Corporate Investment Activity into Payments Tech is Slowing

10 UK Fin Tech Startups to Watch

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Intuit Has Become One of Techs Most Active Acquirers

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Payments Tech Investment Report

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Where Is the Smart VC Money Going in Fin Tech?

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Unlike MasterCard & Visa, American Express Looks Far Beyond


Payments for Venture Investments

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Mobile PoS Upstarts See Increased Investment Interest

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The Boom in Global Fin Tech Investment Fin Tech Grabs $3B
in 2013

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P2P Lending Startups Take More Than Twice As Much VC


Funding As Crowfunding Platforms

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Bitcoin startup investments now total over $400M in aggregate


funding. Q4'14 is already at record deal and funding levels (and
there is more than a month to go).
Bitcoin prices have fallen below $400 but that hasnt stopped investors from
plowing dollars into emerging digital currency companies ranging from
bitcoin wallets to data providers to block chain APIs.
According to CB Insights data, investments in the bitcoin space hit an alltime quarterly high of over $107M already in Q4 2014 and there is still
more than a month to go in the quarter. Deal activity in the space has also
hit new highs in Q4 as well. The funding activity has been boosted by a
handful of notable deals including Blockstream which raised $21M from
investors including Reid Hoffman, Khosla Ventures and Real Ventures. Last
month saw bitcoin wallet Blockchain and bitcoin mining firm BitFury Group
raise $30.5M and $20M, respectively. The deal sizes within the bitcoin space
are definitely stepping up in size.
In total, bitcoin startup investments now total over $400M in aggregate
funding. Its a far cry from Q2 2013, when total funding was under $25M and
there were more investors than investor-backed startups in the bitcoin
ecosystem.

Bitcoin startup funding vs. close price


Most interestingly, the rise in bitcoin startup investments has come as the
price of bitcoin has dropped drastically since hitting record highs in
November 2013. Using bitcoin close price data from Bitstamp, we analyzed
aggregate funding to bitcoin startups vs. BTC close price since July 2010.
The contrast is notable. Since September, bitcoin prices have steadily dipped
below $400 while funding to the space continues to accumulate.

Top Bitcoin startup funding rounds


The top 10 rounds to startups in the bitcoin ecosystem to date are listed
below. Interestingly, Xapo and BitFury appear twice on the list due to
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tranched Series A deals. The largest single funding round in the space goes
to Blockchains $30.5M round led by Lightspeed Venture Partners and
Wicklow Capital. BitPays $30M round from Index Ventures, AME Cloud
Ventures, Felicis Ventures and Founders Fund among others came in a close
second.

At the start of the year, Union Square Ventures took a look at


'Disaggregation of a Bank' startups. Three quarters later, those
companies have raised hundreds of millions in VC funding.
In January, Alexander Pease of Union Square Ventures released a
presentation titled Disaggregation of a Bank, highlighting a host of internetenabled Fin Tech startups aiming to disrupt traditional financial services like
high net-worth wealth management, lending and merchant banking.
Obviously, there are many more tech startups focused on these areas of big
banks than Pease highlights, but nevertheless, we thought it would be
interesting to use CB Insights data to crunch the numbers behind his original
list of 31 bank busting startups. They provide a snapshot into what is
happening within the broader fin tech industry.
Nearly $600M invested in the last 4 quarters
Over the last four quarters, the bank disaggregation startups raised $590M
across 21 deals. Of note, startups on the list have raised $469M after Pease
published his analysis on January 7. Each of the last four quarters have seen
$100M+ invested, with Q214 seeing the highest amount driven by large
rounds to lending firms Prosper Marketplace and Lending Club.

Deal activity moves to mid-stage


Over the last eight quarters, just over 51% of deal activity to these select
startups came at the early-stage (seed/Series A). But YoY deal growth is
clearly moving to the mid-stage as highlighted by the visualization below.
Among the bank disaggregation startups that have raised mid-stage funding
in the last year are Coinbase, Auxmoney, CircleUp and TransferWise, the
UK-based money transfer startup rumored to be raising new funds from
Sequoia Capital at a valuation near $1B.

Taking on banks requires capital (lots of it)


Among the list of startups, Square has raised the highest amount of capital at
over $490M, with its latest $150M raise coming from Singapores Sovereign
Wealth Fund GIC in October. Six of the startups have raised over $100M
including Lending Club, Funding Circle, Stripe and Prosper. Payday loan
company Wonga is also among those startups but is reportedly in trouble
over its lending practices. Another 7 of the companies have raised over
$30M including Dwolla, BitPay and C2FO. All of the startups on the list that
have raised over $30M are below:
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Top Investors
Perhaps not surprisingly, Union Square Ventures which is where Pease
works, was invested in the highest number of companies (9) on the list
including Coinbase, SigFig and Funding Circle. A list of VC investors, outside
of USV, who have invested in four or more of the bank disaggregation
companies since 2009 is below.

After hitting a five-year high in 2013, payments tech deal activity


involving corporations is leveling out in 2014. A mix of tech, telco
and financial firms including Intel, MasterCard, Citi and Motorola
are some of the most active investors.
Over the past five years, private payments tech companies have drawn
massive investment to the tune of over $5B in the last five years.
Interestingly, however, corporate investment into the sector is seeing a pull
back.
After hitting a five-year high in 2013, payments tech deal activity involving
corporations is on pace for its lowest year since 2009 according to CB
Insights data. This report takes an in-depth look at corporate investments
into the payments tech space. Specifically, it looks at financing, stage,
geography trends into payments. All of the corporate investment data
analyzed is available as part of the CB Insights venture capital database.
2014 is a slower deal year
Since 2009, corporate investors have participated in over 140 deals totaling
$1.83B to payments tech companies. While deal activity looks to be down in
2014, corporations have invested in some notable deals including mobile
payments and marketing vendor Mozidos $185M financing (MasterCard)
and iZettles $61M Series C (Intel Capital, SEB Venture Capital).
Corporate funding participation in payments tech peaked in 2012 with mega
deals including American Express $125M minority investment into Chinabased Lianlian Pay and Squares $200M Series D from corporates including
Citi Ventures and Starbucks. Square subsequently took investment from
Singapores sovereign wealth fund.

Mid-stage takes 44% of corporate payments tech deals

Corporates typically jump into payments tech companies at the mid-stage,


with 44% of corporate investments coming at the Series B or Series C stage
since 2009. Some mid-stage corporate investments in 2014 include mobile
payments operator SumUps $13M Series C (Groupon, BBVA), payments
processing app Flint Mobiles $9.4M Series C (Verizon Ventures) and B2B
payments business TraxPays $15M Series B (Software AG, Commerzbank).
Early-stage payments deals have taken 27% of corporate investments over
the period.
The chart below highlights the distribution of corporate deals by stage within
payments tech.

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California tops NY for corporate payments tech deals by over 4x


Peeling back the US payments tech deals, we see California has taken 56% of
corporate investments since 2009 followed by New York and Massachusetts
which take 12% and 11% of deals, respectively. Other states seeing
corporate payments tech deals over the period include Texas, George and
Colorado.
Corporations investing in payments do nearly 30% of their deals outside the
USA.

The most active corporates in payments tech


Intel Capital tops the list of investors by unique portfolio company
investments in the payments tech space since 2009 including iZettle,
Fortumo and mFoundry (acquired by FIS). A mix of payments strategics
including Visa, Citi, MasterCard and AmEx are making investments as are
tech corporations including Motorola Solutions VC and Qualcomm
Ventures. The diversity of the investors in the space underscores the
increasingly messy space that payments has become with everyone from
tech to telco to payments giants all attacking it.
A list of corporate investors with 3+ payments company investments since
2010 are given below:

Intel Capital
Google Ventures
eBay (PayPal)
MasterCard Worldwide
American Express
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Visa
Qualcomm Ventures
SK Telecom Ventures
SingTel Innov8
Motorola Solutions Venture Capital

Note: Both corporations making direct investments in startups as well as


those investing out of separately delineated corporate venture units were
included in the dataset.

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Which Fin Tech companies in the UK are picking up steam?


The UK fintech scene is hot right now, with more than $450M having been
invested in 2014 alone. We decided to use CB Insights data to pick a few
up-and-coming startups that are worth keeping an eye on. These startups
are pre-Series C companies that have received funding within the last year.

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Intuit has acquired more companies in 2014 than any of the past 5
years. We analyze their acquisition activity, industry focus, and
geographic areas of focus.
Intuits inclusion on our Periodic Table of Tech surprised some folks so we
dug into the data a bit. But as our ranking of top tech acquirers highlighted,
the firm has been on an acquisition tear over the past two years having done
more acquisitions since 2013 than the previous 5 years combined. Intuits
CEO recently stated that their increased acquisitions are a step towards the
companys mission To be the operating system behind small business
success.
We used CB Insights Acquirer Analytics to analyze the small business
software companys increased M&A deal activity.
The data below.
2014 already breaks acquisition highs for Intuit
After 9 acquisitions from 2008-2012, Intuit acquired 6 companies in 2013,
and has acquired 8 thus far in 2014, the highest single-year tally in the past
10 years. The largest transaction for Intuit thus far this year came in the
form of a $360M acquisition of Check, a mobile bill pay company. This is the
second largest reported acquisition for Intuit since 2008, with the 2012
$423.5M deal to acquire Demandforce holding the top spot.

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Intuit acquires within its core business


Since 2008 Internet Accounting and Finance has seen the most acquisitions
of any sub-industry with 4, with Billing, Expense Management, and
Procurement trailing by one. Of note, all 3 acquisitions in the Billing space
(Invitco, Lettuce, Prestwick Services) have come in 2014, supporting the
CEOs strategic intent to make Intuit the small businesses operating system.
Of the 4 Accounting and Finance acquisitions, 3 have come since 2013.
PaySuite is the most recent, as the UK-based online payroll services
company was acquired in August 2014 in order to bolster QuickBooks
Onlines international presence. KDK Softwares and GoodApril, the first
company acquired pre-demo day out of Techstars, were Intuits other two
transactions in the space since 2013. See below for all sub-industries with
multiple acquisitions since 2008.

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Intuit goes international in 2014


Intuit has acquired over 10 California-based companies since 2008, including
8 since 2013. Massachusetts and Washington have each seen a pair of
acquisitions in the same time period, while Illinois (itDuzzit) and North
Carolina (MedFusion) rounded out the US acquisitions. On an international
level, India, the United Kingdom, and Australia each have seen an acquisition
in 2014.

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An in-depth look at the state of payments tech and major


financing trends, investors, companies and exit activity in the
industry.
From peer-to-peer payments platforms to point-of-sale systems to
subscription accounting and billing services to cloud-based payment fraud
detection services, investors are actively targeting various issues within
payments. Investors have funded emerging private payments companies to
the tune of over $5 billion in the past five years.
This analysis provides an in-depth look at the payments tech financing
landscape as well as the investors and companies fueling the payments
startup ecosystem.
Specifically, it covers:

Financing Trends By Stage


Payments Tech Geographic Hubs
The Most Well-Funded Payments Tech Startups
Payments Most Active Investors
Exit Activity

As the graph below highlights, deal activity to the funding space has
consistently grown over the last 5 years. With almost 230 deals last year,
the space saw deals climb 8% from 2012 and 171% since 2009.

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The quarterly funding activity chart shows the general growth in deal activity
and the influence of large deals on the overall funding tallies. Q1 2014 was a
breakout quarter for payments tech with almost $700M in venture financing,
owing to a few notable deals including Stockholm-based Klarna, which has
seen heavy investment from Sequoia Capital, and which raised 90M
($121M) in a growth equity round and Stripe, which raised $80M in Series C
funding at a valuation of $1.75B.

Payments Tech Financing by Stage


Some clear trends in payments tech funding by stage have developed since
2009, most notably an increase in early-stage funding as Seed and Series A
deals took almost 41% of all funding in 2013 up from just 16% five years ago.
Higher levels of early-stage funding indicate investor bullishness on the
segment. For corporate innovation groups, these are the emerging payments
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disruptors and technologies to be mindful of. Early-stage financing has mostly


taken share from Series D and later rounds, which have shrunk from over
50% of funding dollars in 2009 to 22% last year.
The sharp spike in 2011 Series C funding is attributable to $100M+ funding
rounds by algorithmic cash-lender Wonga and mobile payments provider
Square. In its Series C round, Square raised money from the likes of Kleiner
Perkins, Khosla Ventures, Tiger Global, and Richard Branson and was valued
at $1.6B. In its most recent secondary transaction from investors including
Rizvi Traverse, Square raised funding at a $5B valuation. It is feasible the
companys valuation has likely slipped given its woes on both the business
model and product fronts (see Squares poor mobile app performance)

In line with funding growth, early-stage deals have increased significantly to


comprise 75% of deals last year compared to 50% in 2009. The increase was
brought about by dramatic growth in seed-stage deal activity which rose to
46% in 2013, in spite of slightly declining Series A activity.

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Payments Tech Geographic Hubs


Not surprisingly, California led US states in payments tech deals by a wide
margin, with 245 deals since 2009 yielding almost $2.2B in investor backing.
Some of the states most well-funded payments companies include Square,
Obopay, Yodlee, Zuora, and Stripe. For comparison, New York and
Massachusetts together saw 112 deals in the same period.
The United Kingdom and India follow the United States in payments tech
deals, although US-based companies held the vast majority of deals in the
industry.

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The Most Well-Funded Payments Tech Startups


Square, a POS solutions provider based in San Francisco, has raised almost
$350M in venture capital to date and is one of the most well-funded
companies in the space.
Stockholm-based Klarna specializes in payment solutions for ecommerce,
and has raised almost $300M in venture capital. Klarna has enjoyed
extensive investment by VC giant Sequoia Capital, which has participated in
the companys Series A round in 2010 and all three of its growth equity
raises since. It is worth tracking Sequoia Capital btw (Sequoia Capital
teardown and Smart Money Fin Tech trends)
Rounding out the top three companies on our list, algorithmic cash lender
Wonga has raised over $145 in venture capital from some major investors,
including Accel Partners, Oak Investment Partners, and Greylock Partners.
Five of the companies below, including Wonga (London-based), are based
outside the United States.

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Investor League Tables


500 Startups leads investors in payments tech companies having invested in
14 companies in the industry since 2009. Some of 500 Startups investments
include Recurly, peerTransfer, and PayClip.
Other widely-known VCs Accel Partners and Andreessen Horowitz top our
list, investing in twelve payments companies each. Intel Capital is the only
corporate venture arm to appear on the list below.

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Early-Stage Investors
Not surprisingly, 500 Startups also tops the list of early-stage payments tech
investors, as all 14 of its investments in the industry were at the seed stage.
SV Angel and Accel Partners tied for second-most investments in the
payments space. Its interesting to note that had incubators been included, Y
Combinator would also have ranked #2 on the list below.

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Mid-Stage Investors
Balderton Capital, the European division of Benchmark Capital until 2007,
has been the most active investor in mid-stage payments companies. The
London-based VC has invested in several startups in the payments industry
since 2009, including Wonga, LevelUp, and EWise.

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Late-Stage Investors
Sequoia Capital, DAG Ventures, FTV Capital, Doll Capital Management, and
TTV Capital led investment in late-stage payments tech among VCs. With
the exception of TTV, all are based in California.

Exit Activity
The payments tech industry saw a decline to about 50 exits last year, down
from a peak of 69 exits in 2012. Acquisitions make up the vast majority of
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exit activity within the industry. Notable industry exits include Braintree,
which provides ecommerce payments platforms and was acquired by eBays
Paypal business unit last year for $800M and Xoom Corporation, an instant
money transfer service that IPOd.
eBay/PayPal have been the top acquirer of payments tech companies in the
past several years, buying six companies since 2009. Google, American
Express, and Intuit also bought several companies in that time. The diversity
of acquirers underscores the players, both new and old, attacking the
payments space.

Notes:
This analysis includes private company investments in the payments tech
industry by venture capital firms, corporations, corporate venture investors,
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hedge funds/mutual funds, angels, incubators and accelerators. Debt, grants


and lines of credit were not considered in this dataset.

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Fin Tech deal activity by 12 top VC firms ranging from Sequoia


Capital to Andreessen Horowitz has grown 61% from 2010 to
2013.
If trying to understand the emerging business models, technologies and
disruption in Fin Tech, one of the smart ways we are seeing financial
services firms do this is by following deals and investor money flowing into
Fin Tech companies. But instead of tracking all investors, lets follow the
smart VC money since as we all know, not all VCs are created equal.
And within the Fin Tech universe today, the smart money VCs are investing
in technologies ranging from peer-to-peer loan marketplaces to mobile
payments to big data tools for capital markets.
As new innovation rapidly makes its way through the financial services
sector, Fin Tech investments across the entire ecosystem have exploded in
recent years. Of note, a recent report released by Accenture and the New
York City Investment Fund using CB Insights data found global Fin Tech
investments reached nearly $3B in 2013 from under $930M in 2008.
This research brief highlights the Fin Tech investment activity of 12 of the
top venture firms as identified by our tech unicorn VC analysis. The VC
firms whose Fin Tech investments are analyzed include:
1. Accel Partners
2. Andreessen Horowitz
3. Battery Ventures
4. Benchmark Capital
5. Bessemer Venture Partners
6. CRV
7. Greylock Partners
8. Kleiner Perkins Caufield & Byers
9. New Enterprise Associates
10. Redpoint Ventures
11. Sequoia Capital
12. Union Square Ventures
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The data below.


2014 will be a record year for smart VC investment in Fin Tech
Looking at deal activity within the Fin Tech market since 2007 by these 12
VC firms, we see a significant surge in deal activity since 2009. In fact, total
Fin Tech deals by the 12 firms in 2013 grew 61% compared to 2010 and a
notable 309% compared to 2009. The growth in Fin Tech deals accounts for
both new investments as well as follow-on bets to Fin Tech startups ranging
from Stripe to Wonga to Betterment to Level Money.

Which areas within Fin Tech are top VCs bullish on?
Using the CB Insights Business Social Graph, we visualized the universe of
Fin Tech companies that the 12 VC firms have invested in since 2007 and
find hundreds of deals within Fin Tech that the top firms have participated
in.

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While Fin Tech investments span a diverse array of companies ranging from
payments to asset management to personal financial management, there
appear to be several themes that these brand-name venture firms see
opportunities in. When we use the Business Social Graph inputs and cluster
companies by focus area, four markets emerge as being consistent areas of
focus among the top 12 venture firms. These include

Lending
Personal finance management
Payments technology
Bitcoin

With hundreds of investments, there are many fledgling as well as many


more established private companies on the list. Some of the startups which
feature investment from multiple investors include Square (backed by
Sequoia and Kleiner Perkins), Boku (Benchmark, NEA, A16Z), Stripe
(Sequoia, Redpoint, A16Z), Coinbase (A16Z, Union Square Ventures) and
Funding Circle (Accel, Union Square Ventures).

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As financial services institutions increasingly begin to monitor the changing


landscape before them, following the smart money is perhaps one of the
best ways to understand the trends they should stay ahead of and the
companies they may want to watch from a competitive, acquisition,
partnership or procurement perspective.

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MasterCard and Visa made more than 60% of their investments in


payments since 2009. American Express, on the other hand, saw
payments take just 27% of its deals.
Visa, MasterCard, and American Express are the largest payment networks
in the US (Discover is a distant 4th). As the payments space sees tech
innovation ramp up, the three firms have actively taken to strategically
investing in startups. Over the past four quarters, the three have
participated in 14 deals representing $165M in aggregate funding. On a deal
basis, the triumvirate have done 27% more deals YoY.

No surprise Payments investments dominate


Nearly 40% of all deals made over the last five years by AmEx, Visa and
MasterCard went to payments tech companies as one might expect. More
interesting are investment forays by the payments giants into areas like
eCommerce apparel & accessories business intelligence and advertising, sales
and marketing tech (more on that below).
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American Express goes off the beaten path


When we break down the sub-industry level investments by each company,
it is clear that American Express is most heavily investing outside its core
payments business. While MasterCard and Visa each made 60% or more of
their investments in payments over the period, AmExs payments
investments accounted for just 27% of their total deals.
Some of American Express largest investments have, in fact, been in areas
quite removed from payments. In February 2013 AmEx participated in the
$41.5M Series B round for custom glasses maker, Warby Parker. Then, in
July, they invested in a $53M Series C round for Fancy, a social shopping and
blogging platform to list products. Both Warby Parker and Fancy would
seem to be aligned with AmExs affluent, high value cardmember base, but of
course, itd be fair to ask why AmEx felt the need to invest in either
company at all esp in late-stage rounds with lofty private market
valuations? Fancy, a Pinterest competitor, was valued at a rumored $600
million in the round AmEx invested in.

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Motivations and strategy aside, it is clear that American Express has bought
into its venture strategy more than its competitive peers. The NYC-based
payments behemoth has in 19 deals in the last 2 years versus Visa and
Mastercard which have combined for a total of 6 deals. Whether American
Express strategy of actively investing in companies far afield from its core
business proves prescient or ill-advised remains to be seen.

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In addition to traditional VCs, mobile point-of-sale startups are


seeing investment from the likes of eBay, Mastercard, Starbucks
and Verizon to name a few. In other words, the payments
landscape continues to get messier.
Mobile PoS startups which enable merchants to conduct transactions and
sometimes manage their businesses through mobile devices such as
smartphones and tablets have raised $340M across 34 deals in the last 4
quarters. Deal growth at the seed and Series B stages suggests increased
competition at the early stage and a healthy follow-on investment market for
those with early traction.
Overall, deal activity has remained flat YoY and funding was actually down
7.5% as a result of the Q3 2012 $200m series D financing for Square, led by
Citi Ventures, Rizvi Traverse Management, and Starbucks.

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Series B Leads Funding Growth


The sector saw series B financings soar 200% YoY with the likes of iZettle,
Vend and Flint Mobile getting funded. In the same time period, seed-stage
financings grew 80% YoY. The mobile PoS space remains in its early days as
evidenced by the fact that 95% of deals are occurring in Series B or
prior. Interestingly, when companies get past the Series B, the round sizes
step up materially as evidenced by the average and median deal sizes below
in the hundreds of millions of dollars.\

Corporate Investors Active in Mobile PoS Investing


Over the past two years, a diverse array of corporate investors have been
actively investing in mobile PoS companies. Notable corporate investors
include Ebay, Starbucks, Verizon Ventures, Citi Ventures, Mastercard, and

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American Express Ventures. The diversity of the players is notable. While


the expected credit card companies and payment networks are represented,
there are also telecoms, tech and retail companies all attacking the
space. As weve highlighted before, the payments landscape is becoming
increasingly messy and the mobile PoS investors underscore that.
21% of deals in the last year have involved corporations. Some of the
notable mobile PoS deals in which theyve participated include:
Square (Citi Ventures, Starbucks Corporation) - Facilitates
transactions between buyers and sellers with its free credit card reader,
while also using Square Register to serve as a full point-of-sale system for
businesses.
iZettle (American Express Ventures, Mastercard Worldwide)
Provides a free mobile app and mini chip-card reader that lets anyone make
or take payments anytime, anywhere.
SumUp (American Express Ventures) Provides merchants with a
free card reader connected to a mobile device and an app to enter the
amount to be transferred.
Flint Mobile (Verizon Ventures) Develops an app that enables users
to process payments using only their phone without any additional card
readers or dongles, through patented technology.

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Accenture's new report 'The Boom in Global Fin Tech Investment' highlights
that global fin tech financing has tripled over the past five years with UK and
Ireland-based companies taking the lion's share of Europe's Fin Tech deals.
Global investment in financial technology or Fin Tech has more than tripled
during the last five years. And among the growing global centers of Fin Tech
investments is the U.K. and, more specifically, London.
Those are among the many highlights of Accentures new report The Boom
in Global Fin Tech Investment: A new growth opportunity in London. Using
CB Insights data, the report offers insightful commentary and analysis
around Fin Techs growth trajectory and the emergence and opportunities
of London as Europes Fin Tech capital. Below are some highlights in the
Accenture report. The entire 16-page report can be downloaded for free by
logging into CB Insights and visiting the Research tab. If you dont have an
account, you can create one for free here.
Global Fin Tech investments hit $3B in 2013
With innovation enabled by new consumer behaviors, technology and
regulations, 2013 saw private Fin Tech companies raise nearly $3 billion
more than tripling the $930M invested globally in Fin Tech in 2008.

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The rise of London as Europes Fin Tech hub


Accentures analysis of European fin tech data reveals that since 2004 the
lions share of Europes Fin Tech deals and financing have taken place in UK
and primarily London. In 2013, UK and Ireland represented more than half
(53%) of Europes Fin Tech deals and more than two-thirds of Europes Fin
tech funding (69%).

Silicon Valley dominates Fin Tech investments globally


While London may be Europes Fin Tech capital, its share of global Fin Tech
financing is still relatively small, according to the Accenture report. In 2013,
nearly 1 of every 3 Fin Tech dollars and 1 of every 5 deals went to Silicon
Valley-based companies. Europe, meanwhile, accounted for 13% of all Fin
Tech funding globally in 2013 and 15% of deals. However as the chart below
highlights, Londons five-year growth trajectory in Fin Tech investments has
outpaced Silicon Valley.

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While demand for both crowdfunding and P2P lending platforms has grown,
funding dollars have primarily accrued to a small group of well-funded P2P
lending platforms including Lending Club, Prosper Marketplace and Funding
Circle.
Betaworks unveiling of its new Alphaworks investment platform this week
was the latest effort bolstering crowdfunding as a legitimate and even
mainstream alternative for financing. Of course, crowdfunding also has wellknown players like Kickstarter and Indiegogo as well.
Venture capital investors are playing a big role in the rise of alternative
financial services putting funding dollars toward both crowdfunding (equity,
donation, reward etc.) as well as peer-to-peer lending platforms, matching
individual borrowers and unrelated lenders or peers.
Demand for both crowdfunding and P2P lending platforms has grown but as
the chart below highlights, P2P lending platforms have raised nearly $715M
vs. $237M to crowdfunding platforms since 2009.

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The most well-funded P2P lending company is Lending Club, which counts
investors including Norwest Venture Partners, Canaan Partners and Union
Square Ventures and is currently valued at $3.8B and is a Tech IPO Pipeline
company. Chinese P2P lending company Renrendai announced a mega
$130M round led by Trustbridge Partners in January. Other P2P lending
startups that have raised $25M+ just since 2009 include UK-based Funding
Circle, Benchmark Capital-backed Prosper Marketplace and Zopa, which
raised a $25M round from hedge fund Arrowgrass Capital Partners last
month.
There have been some notable VC financings in the crowdfunding space. Just
last month, online crowdfunding platform Indiegogo raised a notable $40M
round from investors including Kleiner Perkins Caufield & Byers and
Institutional Venture Partners. Equity crowdfunding platform Angellist
raised $24M last year at a rumored $150M valuation.
Interestingly, Union Square Ventures-backed KickStarter is among the most
prominent crowdfunding platforms but last raised funding 48 months ago so
will be one to watch in the coming months.

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