Why Seed-Stage Deals In Fintech Are On The Rise


Welcome to our weekly roundup of the latest news in the fintech industry. This week, we examine the increase in seed-stage deals and explore the reasons behind this trend. Despite a decline in later-stage funding deals, the fintech sector is seeing a surge in seed-stage rounds.

Key Takeaway

The fintech industry is experiencing a rise in seed-stage deals, which can be attributed to the influence of the public markets and the adaptation of entrepreneurs and investors to the changing funding landscape.

The Influence of the Public Markets

Venture banker Samir Kaji, CEO of Allocate, suggests that the private markets often take cues from the public markets, which may explain the decrease in later-stage deals. The Fintech Index, which tracks the performance of emerging publicly traded fintech companies, experienced a significant drop of 72% in 2022. As a result, seed-stage deals are relatively unaffected, as these companies are still in the early stages of development and are not yet influenced by public market sentiment.

A Slow Start, but Signs of Change

In the first quarter of 2023, the investment pace was slow, including for Series A and later stage deals. However, there are signs of improvement as entrepreneurs and investors adapt to the changing environment. Kaji believes that, within the next 18 to 24 months, there will be a resurgence in later-stage activity.

Trends in Fintech Funding

Fintech sectors such as retail and enterprise are following the trend of an increase in seed-stage deals. According to PitchBook, in the second quarter, retail fintech had 135 seed deals, the highest among all stages. In the enterprise fintech space, early-stage deals made up the majority (239), with seed-stage deals following closely behind (221).

Slope: A Rising Fintech Startup

Amidst the challenging climate for fintech startups, Slope, a business-to-business payments platform, has managed to secure significant funding. Founded by Lawrence Murata and Alice Deng, Slope aims to simplify digital order-to-cash workflows for enterprise companies. The company recently raised $30 million in a venture round led by Union Square Ventures, following its earlier seed round of $8 million in 2021 and a Series A funding of $24 million in the previous year.

This success story demonstrates the resilience and potential for growth that exists within the fintech industry, even during challenging times.

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