Hey Fintech Friends,

What better way to ring in Q3 than with a recap of what fintechs have been up to over the past quarter?

For new readers, Signals is the premium subscriber edition of TWIF designed to get you away from the headlines and to explore the larger trendlines. Each quarter, we break down four key questions on fintech activity:

1. Which concepts are getting funded? 
2. Where are exits, M&A, and SPACs concentrated? 
3. Which firms are raising debt and venture funds for fintech? 
4. Which products were launched over the last quarter? 

If you haven’t already, subscribe to future editions here!

Overall activity

Fintechs raised a total of $4.925 billion in Q2, a 59% decrease from the prior quarter. The number of rounds raised was down 11%, and rounds shrank 54% in average size* compared to Q1.

Public markets, meanwhile, signaled that weakening appetite for fintech investments may be at its trough. Valuation multiples in F-Prime’s Fintech Index have normalized to around 4x EV/revenue– a steep drop from highs of 21.7x in 2020, but this hasn’t stopped public fintechs’ market caps from surging by 104% (beating the NASDAQ nearly five-fold):

Even as valuation multiples stay down, fintechs' revenues are still healthy; revenues in the Fintech Index are on average growing 35% YoY.

Let’s dive into fintech activity in Q2. 

Which concepts are getting funded? 🤑

Venture funds struggling to raise fresh funding has left VCs with the lowest levels of capital seen since 2017, which... doesn't paint a great outlook for fintech funding in the near future. 

This didn’t stop capital from flowing across all fintech concepts in Q2. Areas that received the most funding were:

• Consumer financing, led by DMI Finance’s $400M raise, Advance Intelligence Group’s $80M raise, Petal’s $35M raise, and Yendo’s $24M Series A.
• Investment infrastructure, led by Clear Street’s $270M Series B, Altruist’s $112M Series D, AlphaSense’s $100M Series D extension, and FIA Tech’s $25.4M raise.
• Business financial management, led by Zip’s $100M Series C, Clara’s $60M Series B extension, Mooncard’s €37M Series C, and Mosaic’s $26M Series C.
• Payments B2B & B2C, led by PhonePe stacking another $200M onto their latest round, TerraPay’s $100M Series B, P97’s $40M raise, and Paydock’s £25M Series A.