Financial Technology, Data, and Analytics

Dear Clients and Friends,

As the year end approaches, it is clear that volatility is not going away soon. After the recent market swings – and the drop in the value of cryptocurrencies – it’s easy to lose sight of the fact that the best b2b Fintech firms have managed to  persevere – and even succeed in this volatile world. The key may be  staying at the forefront of technological innovation. 

As you will see from our December report found below, values, trends and transactions for the best companies in the seven segments of the B2B Fintech world that we follow and sometimes lead are still near all-time highs. Please see below for our December Fintech M&A Update.

Innovation – the willingness by the best to embrace new technologies (Artificial Intelligence and Machine Learning, Cloud, Blockchain, Quantum Computing, etc.) and leverage them for the benefit of clients has long been a hallmark of our industry. Never has this approach been more needed than now as clients meet critical (sometimes existential) challenges. DIY, which sounded good to many firms when profits were fat, now may be ineffective (and expensive) in an environment in which competitors offer creative new approaches – at prices that keep dropping, and 3rd party Fintech firms offer services that can help create new products faster or help streamline the complex, multi-layered procedures that govern operations. 

This brave new world requires banks, brokerage firms, stock exchanges and other financial services firms to focus on areas where they can add unique value and to outsource functions that others can provide more efficiently.

While there may not be an obvious single key to survival in this brave new world, it’s clear that doing the same things the same way over and over again is a sure fire way to fail. The solutions clearly include a willingness to challenge the status quo combined with rapid adoption of new technologies to create new products and reduce time consuming, duplicative and error-prone tasks, incidents of fraud; increase transparency and efficiency in multi-party transactions, and otherwise dramatically lower costs of production. The best B2B Fintech companies get it. We enjoy advising them as they seek to buy, sell or raise capital.

For the year ahead, we wish you and your families health, contentment, a little less volatility and continued strength in the in the seven segments of the Fintech world that we follow and sometimes lead. 

 A few of the more interesting recent transactions include:

• Virtu (NASDAQ:VIRT) agreed to acquire ITG for $1.1bn,
• Coinbase (San Francisco, CA) raised $300mm in a venture funding round led by Tiger Global,
• Wave Computing (Campbell, CA) raised $200mm in an equity funding round led by Oakmont Corporation with participation from existing investors,
• Lloyds Banking Group acquired a 10% stake in ThoughtMachine for ₤11mm (~$14mm), implying an enterprise value of ₤110mm (~$140mm),
• Poynt (Palo Alto, CA) raised $100mm in a Series C funding round led by Elavon and National Australia Bank,
• Sezzle (Minneapolis, MN) raised $100mm in a debt funding round led by Bastion Capital.

Please see our December Fintech M&A update below.