Americas soars to record US$23 billion in annual VC fintech investment
Fintech investment in the Americas showed incredible resilience in 2020, with over US$79 billion in investment, including US$58 billion in H2’20. Despite its major impact on some sectors, the pandemic showcased the value of many fintech sub-sectors as consumers and businesses shifted to digital solutions to meet their financial needs.
Rebounding M&A activity in H2’20
After a quiet H1’20, M&A rebounded significantly in the second half of the year, driven by activity in the US, including the US$22 billion acquisition of TD Ameritrade by Charles Schwab, the US$7.1 billion acquisition of Credit Karma by Intuit and the US$5.3 billion acquisition of Vertafore by Roper.
IPO and SPAC activity surging in payments space
H2’20 saw a number of IPO exits in the Americas, including US-based Paya and Canada-based Nuvei, while Paysafe announced plans for a special purpose acquisition company (SPAC) transaction.1 Following on its TSX IPO in 2019, Canada-based Lightspeed POS also held a secondary listing in the US in H2’20.
Challenged lending market sees numerous acquisitions in H2’20
Alternative lending companies saw their funding models challenged in 2020 as their risk profiles were significantly affected by COVID-19. This presented good buying opportunities for well-capitalized companies looking to acquire capabilities. In H2’20, American Express acquired Kabbage, Bread was acquired by Alliance Data and OnDeck was acquired by Enova.
Unicorn valuations remain high
Valuations continued to be strong throughout 2020, especially for big unicorns. This likely stems from the fact they are proven entities, their business models have shown resilience in the face of COVID-19, and many are expected to see growth coming out of the pandemic.
Record Q4’20 and year for fintech investment in Brazil
Brazil’s record US$506 million in fintech investment in Q4’20 helped drive it to a record annual high of over US$1.4 billion in 2020. Brazil, which saw lending company Creditas gain unicorn status in H2’20 with its US$255 million raise, will likely continue to be the leading fintech market in Latin America in 2021.
What to watch for in 2021
- Active investment due to liquidity in the market
- Increasing investments in the blockchain and cryptocurrency space
- Strong M&A activity and both direct IPOs and SPAC transactions