Fintech Funding Secrets

In last week's newsletter, we discussed fintech funding from the first quarter of 2024. This week, author David Penn published his summary of the funding that Finovate alumni (companies that have demoed on the Finovate stage in the past) raised in the first quarter.

While Penn generally compares each quarter's funding to other time periods, this quarter's funding was notably different. Why? There were multiple undisclosed rounds.

In today's regulatory and competitive environment, it's difficult to fault a startup for not disclosing the amount of funding. Among the incentives to keep the financial details under wraps are:

1. Competitive Advantage: They may believe that disclosing the amount could provide valuable information to competitors about their financial health, strategies, or market position.
2. Confidentiality: The startup may have confidentiality agreements with investors or strategic partners that prevent them from disclosing specific details of the funding round.
3. Flexibility: By not disclosing the amount, the startup can maintain flexibility in how they use the funds and make strategic decisions without being constrained by public expectations or perceptions.
4. Regulatory Considerations: In some cases, regulatory requirements or considerations may limit the amount of information that can be disclosed publicly about a funding round.
5. Strategic Reasons: The startup may have strategic reasons for not disclosing the amount, such as wanting to maintain a lower profile or avoiding undue attention from competitors or regulators.

Regardless, shrouding the amount of funding makes it quite difficult to compare the health of venture funding. However, as industry analyst Jason Mikula pointed out, venture funding is not necessarily a good indicator of industry health.

"While venture funding to fintech startups is worth keeping an eye, these aren’t numbers that keep me up at night," explained Mikula, adding, "capital is an input and, I think it’s safe to say, the glut of capital we saw deployed in 2020-2022 led to significant value destruction by funding numerous copycat startups, enabling uneconomical business models, and empowering undisciplined founders to spend without consequence."

That positive take is what the industry needs to carry it into this second quarter.

Wearing rose-colored glasses, I'm Julie Muhn, bringing you this week's Finovate Weekly newsletter.

Finovate Alumni Quarterly Funding Update

Finovate Research Analyst David Penn talks fintech funding in his latest piece:

Nine Finovate alums raised more than $113 million in Q1 of 2024. The relatively low fundraising results for the first three months of the year do reflect larger trends in fintech funding. But the fact that nearly half of the alums that raised funds in Q1 did not disclose the amounts raised tells us that the quarterly funding haul for Finovate alums was higher than the $113 million we have been able to confirm.

Read more: https://finovate.com/more-than-113-million-raised-by-nine-alums-in-q1-2024/

Weekly Fintech News Roundup

IDnow launches video verification service, VideoIdent Flex.

Aurora Payments launches ARISE, a one-stop payment platform for small and medium businesses.

Codat ’s new product aims to replace checks.

SoFi to act as sponsor bank for Rapid Finance’s new line of credit prepaid card.

HighRadius launches B2B payments.

Pause Button: Cacti Species for the Cacti Curious

Tomorrow I'm heading off to Arizona, a state that has a climate vastly different from what I am used to here in Montana. In addition to sunshine, heat, and good food, I'm looking forward to seeing different varieties of cacti.

If you're cacti curious, check out the video below. It details many of the 1,750+ cacti species and what makes them unique.

https://www.youtube.com/watch?v=r9RL9ISACTs

The Finovate Podcast: Fintech through the Lens of Human Behaviors

Finovate's latest podcast episode is live. In this feature, host Greg Palmer catches up with Erin B. Taylor and Anette Broløs , Co-founders of Finthropology and authors of Customer-Centric Innovation in Finance. In this episode, Palmer speaks with Tayor and Broløs about the importance of viewing fintech through the lens of human behaviors.

Listen to how banks and fintechs can leverage human behavior to enhance their own products and services: EP 212: Erin Taylor and Anette Brolos, Finthropology.

FinovateSpring on the Horizon

We're a little over one month away from FinovateSpring, which is taking place May 21 through 23 in San Francisco. Right now, 8 of the top 10 U.S. banks have already registered, so don't wait to save your spot to take part in the conversation.

Regardless of whether or not you plan attend the event, one of the best ways to get a sense of what will be on stage is to check out our Sneak Peek blog series, which highlights the technologies that the demoing companies will debut on stage. We've already unveiled 15 of the demoing companies; stay tuned over the next few weeks to discover more!

Header photo by Kristina Flour on Unsplash

Funding photo by Matthias Groeneveld

Podcast photo by Tanya Kukarkina on Unsplash

FinovateSpring photo by Jahoo Clouseau