Financial technology was the biggest game changer last year, with the 2020 covid-19 lockdowns precipitating new models of payment, along with new structures.
Online share trading platform Robinhood had one of the most eventful six months of any company in the first half of 2021. Users pumped considerable amounts of money into ‘meme’ stocks such as GameStop, Nokia and AMC – many of which were name brands considered undervalued in the wake of the pandemic – meaning Robinhood had to raise $3bn to cover the collateral requirements of its clearing house.
In the event, the Alphabet and Roc Nation-backed company secured $3.4bn in equity financing in February. It went public four months later in a $2.09bn IPO, pricing its shares at the bottom of its $38 to $42 range. Even that came to seem high, with its shares closing at $18.20 in late January 2022.
The sector’s largest IPO involved Nu Holdings, the operator of Brazil-based digital bank Nubank, raising $2.6bn in a US offering earlier this month. Elsewhere in digital banking, Tencent and Allianz-backed N26 netted $900m at a $9bn valuation, while Revolut bagged $800m in a July round featuring SoftBank Vision Fund 2, valuing it at $33bn. Chime raised $750m at a $25bn valuation and Slice secured $220m in series B funding.
Child’s play
There were also increasing numbers of banking apps targeted toward children, including Greenlight, which secured $260m from investors including Wells Fargo Strategic Capital and Step, which received $100m in a series C round featuring Stripe.
Klarna spearheaded a group of buy-now, pay-later operators that raised substantial amounts this year, closing a $1bn round in March before Vision Fund 2 led a $639m round four months later that lifted its valuation to $46bn. Klarna itself took part in a $100m series C round for Billie, while Zilch and Addi received $190m and $140m respectively, in their series B rounds and FinAccel agreed a reverse merger in August at a $2.5bn valuation
Many of the most active new entrants into corporate venturing were from digital first industries, indicating the traditional image of CVC, as an out-of-touch incumbent business relying on strategic investments to access cutting-edge technology, no longer applies.
This could be seen most fervently in the digital currency space, where players such as crypto trading platforms Coinbase and Binance, blockchain app publishers Animoca Brands and Dapper Labs, and trading firms Alameda Research and CMT emerged as some of the biggest backers of the year’s crypto startup boom.
Quick off the blocks
The fastest growing sector within fintech involved cryptocurrency and blockchain product developers, which were fuelled by corporate capital within the sector, notably from the likes of Coinbase, Binance, Alameda Research and Animoca Brands.
The overall funding in corporate venture capital-backed rounds for pure-play cryptocurrency technology developers rose from $773m over 35 deals in 2020 to more than $6.3bn across 92 rounds in 2021, according to Global Corporate Venturing data.
Coinbase, the corporate-backed operator of a cryptocurrency exchange, went public through a direct listing in April valuing it above $65bn, three months after digital currency platform Bakkt agreed a reverse merger at a $2.1bn valuation. Blockchain payment technology provider Circle was valued at $4.5bn in its own reverse takeover.
Digital currency exchange FTX, received $900m in a July round featuring Coinbase and SoftBank, and hiked its valuation to $25bn three months later in a $421m series B-1 round. Peer Gemini subsequently took in $400m through a November round.
Bitcoin technology provider Nydig pulled in $300m across March and April before adding $1bn earlier this month from investors including FIS, Fiserv, MassMutual and New York Life at a valuation topping $7bn. Fellow crypto technology producers Ledger and Fireblocks closed rounds totalling $380m and $310m respectively, with the latter reportedly in talks to raise $400m from VC firm Sequoia Capital.
As the year progressed, blockchain and crypto technology increasingly began to stretch outwards into new areas, initially with non-fungible tokens (NFTs), mirroring their increasing influence in the collectible investment space.
NFT fantasy sports operator Sorare, received $680m in a SoftBank-led series B round valuing it at $4.3bn, while Dapper Labs – also a big CVC investor – lifted its valuation to $7.6m in a $250m GV-backed round, and corporate-backed NFT marketplace OpenSea was reported last month to be in talks to raise money at a $10bn valuation.
The space also saw a flurry of rounds for play-to-earn gaming guilds towards the end of the year, and we expect this to be a significant growth area in 2022.
