Funding to payments startups already tops $3B this year

Steven Loeb · December 2, 2015 · Short URL: https://vator.tv/n/41c8

The amount of dollars and number of deals going to these companies quadrupled since 2010

Payment startups are having a big year, with exits rising to the most in at least five years, and now reports that the space is hitting record levels of venture financing.

Funding to private payments companies already reached over $3.3 billion by mid-November, according to data out from CB Insights. That is an increase of 37 percent year-over-year compared to full-year 2014, which had $2.4 billion in venture capital .

Deals, meanwhile, have hit 235, and are already up 5 percent from the 223 in all of 2014. At this current rate, CB Insights is projecting totals of $3.8 billion in 266 deals for the full year 2015.

What's really impressive is how quickly this space has grown in a pretty short amount of time. In 2010, only $445 million was invested in 63 deals. Those numbers have quadrupled in just the last five years.

To see much this space has grown, all you have to see are the numbers in the last four quarters, and how they tower over all previous years.

Two of the last four quarter saw at least $1 billion in funding. Prior to the fourth quarter of 2014, the largest funding had been $638 million, which was in the first quarter of that same year.

Three of the last four quarters have also seen at least 60 deals, where the previous high water mark had been 55 in the fourth quarter of 2013. Eight out of the last nine quarters have had 50 or more deals completed. In 2010 there wasn’t a single quarter that surpassed 20 deals

The huge numbers in this past quarter were driven by a few big deals, according to CB Insights, including the $680 million investment from Alibaba Group and affiliate Ant Financial into One97 Communications, the parent of Indian etailer Paytm. The other big deal was the $400 million invested in Alibaba’s financial services arm Ant Financial Services Group.

In fact, over the last five years, those were the two most well funded startups in the space. Other big players include Affirm, which has raised $325 million; Mozido, which has raised $314 million; and Klarna, which has raised $289 million.

When it comes to the most active investors in the space, 500 Startups and Andreessen Horowitz tied for number one, followed by Plug and Play Ventures, and SV Angel and Accel Partners which tied for the number four spot.

The payments space has been seeing more funding, and has been maturing as well, with a higher number of exits as well.

In the fourth quarter of 2014, there were a total of 11 exits, followed by another eight in the first quarter of 2015. That is much higher than the typical three or four, sometimes five, that the space has been seeing since 2010. 

However these were almost all mergers and acquisitions. Overall, 2014 saw 22 exits, only one of which was an IPO. In fact, since 2010, there have been 87 total exits in the payments space, and only seven of them were IPOs, including QIWi, which raised $884 million and Xoom, which raised $509 million in its IPO, both in 2013.

(Image source: bizjournals.com)

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