2019: Year of the fintech inflection

2019 was an interesting year -- an inflection point, perhaps -- for fintech. That's because the nature of fintech investing is changing.

• $34.5 billion was invested in the industry across 1,913 deals, according to CB Insights' Q4 2019 State of Fintech report.
• That's a 15 percent dip year over year and a five year low in early stage deals.

More money is headed to growth stage companies. That means earlier stage fintech firms are seeing less investment.

• Nearly 50 percent of 2019 funding was concentrated in 83 mega-rounds ($100 million+) totaling $17.2 billion.
• As a percentage of deals, Series B+ rounds topped 5-year highs.
• 2019 saw fintech deals and funding spread to emerging and frontier markets. South America, Africa, Australia, and Southeast Asia all saw funding reach new annual highs. 
• In Q4, there were eight new unicorns created, including Next Insurance, Ripple, and Figure.

In terms of sectors, insurtech appears to be particularly hot right now, hitting an 8-quarter high in the amount of funding ($1.8 billion).

• 4 megarounds in mid-to-late-stage growth pushed the sector higher.
• Overall, five insurtech unicorns birthed in 2019 are scaling within various insurance verticals, including Lemonade, Hippo, Next Insurance, wefox, and Bright Health.

Challenger banks raised over $3.7 billion across 96 deals in 2019, records for both deals (28) and dollars ($955 million).

• Fintech firms that lead with a debit card added 54 million combined accounts in 2019.
• The two largest in this category are Nubank, with 20 million accounts, and Revolut, with 8 million.

The US fintech market also exhibited some interesting dynamics in 2019.

• US funding rose to $4.6 billion, driven by several mega-round investments to growth stage fintech companies.
• Meanwhile, aggregate deals fell slightly, partially due to early-stage deals dropping 11 percent from Q3’19.