Despite the slowdown, local fintech investors and entrepreneurs remain optimistic
2021 was fintech’s year. One in five invested venture dollars went to the sector, according to CB Insights. Fintech M&A, IPOs and exits almost doubled year-on-year as well.
2022 has been a slightly rockier time for the fintech sector, prompted by the general VC slowdown and sub-sectors such as BNPL (buy-now-pay-later) dealing with increased scrutiny.
Still, local investors and startup founders continue to see opportunities.
“While it’s true that fintech funding has declined since its peak in 2021, quarterly VC investment in fintech companies is still higher than it was in 2020,” said Neil Kapur, partner at Atlanta-based TTV Capital. “We have been investing in early-stage fintech startups for the past two decades, and our firm has seen all types of macroeconomic conditions and market changes. Through it all, our investment strategy has not changed. We are always looking for early-stage fintech companies that solve a critical unmet need and have a path to profitability, led by dynamic entrepreneurs with a big vision. We will always be optimistic about fintech because we have seen firsthand how new ideas can dramatically improve the way we engage with money.”
TTV Capital has invested in 14 companies in 2022 so far, including Southeast-based startups Ledgible, Grifin and Themis.
51 local fintech and payments-focused companies raised a total of $540 million between angel and Series C rounds, according to available Crunchbase data. Some of the big funding headlines this year have come from Built Technologies, FilmHedge, Charityvest, Groundfloor and Finmark.
This is on top of the growing list of local late-stage startups in the area that raised significant funding rounds in 2020 and 2021, such as RoadSync ($30 million Series B) and Greenlight ($260 million Series D).
Two of the larger fintech rounds have been up in North Carolina. Viably, based in Cary, North Carolina, raised an impressive $21 million seed round this week from Viola Ventures and Salesforce Ventures, Angular Ventures and Bull City Venture Partners.
The funding will go towards building the SME-focused financial management app.
Apiture, the Wilmington, North Carolina fintech startup focused on mid-sized banks and credit unions, closed a $29 million venture round this summer from Live Oak Bank, Pinnacle Venture Partners and BHG Financial.
Two-thirds of the capital raised in the round will come from existing Apiture customers, according to COO Chris Cox. “Their investment reinforces the strength of Apiture’s digital banking solutions in a competitive market. Apiture’s solid financial profile represents a strategic differentiator given our focus on both revenue growth and a path to profitability,” he told Hypepotamus.
That brings the startup’s total funding up to $59 million, according to Crunchbase.
Fintech trends to note
Kapur told Hypepotamus that the TTV Capital team remains optimistic even as the fintech landscape continues to shift and react to changing economic conditions in 2022.
“Fintech today is ubiquitous. It used to be that banks and credit unions were the gatekeepers, and individuals interacted with their money through specific channels. Today, people access money in different contexts and through different platforms, and we’ve seen that evolution in our portfolio over the years, we are witnessing an expansion from fintech focused on building traditional financial services to companies leveraging fintech as a core component of their business model – and that is a winning piece,” Kapur added.
The payments sub-sector (including real-time payments, buy-now-pay-later and B2B payment options) continues to show strong signs of growth both in terms of investment and overall M&A activity. Fast electronic payment acceptance, demand for consumer-friendly payment services and “significant dry powder and interest from both strategic and financial buyers” could help boost growth in the sector going forward, according to a KPMG report.
That could be good news for the local payments-centric fintech space.
Atlanta-based Sionic recently announced the launch of the first “pay-for-bank” real-time payments for US merchants. This allows merchants to bypass credit card fees and receive direct cash deposits.
Sionic believes this is part of the “major redistribution within digital payments” that closes the gap on deposits from points of sale. Ronald Herman, founder and CEO of Sionic, told Hypepotamus that instant digital bank payments are a “new way to more fairly redistribute value back to merchants and consumers—the backbone of the American economy.”
“We believe the timing of bank-to-bank digital cash deposits at the point of sale is ideal for both consumers and merchants,” Herman added. “In light of rising costs of just about everything, layoffs and an increase in personal/credit card debt, Sionic offers consumers a way back to smart spending – Pay-by-Bank provides a safe and easy way to help control budgets. This is a good step forward in helping sellers fight inflation. Likewise, from local businesses to global enterprises, merchants remain trapped and paying increasing credit card fees. For merchants, direct cash deposit into their bank accounts within seconds at the POS reduces card swipe fees and helps offset rising labor and product costs.”
This pay-by-bank option is an extension of Sionics’ ULink merchant platform, which allows same-day ACH payments.
Sionic is not the only local fintech launching new payment-focused products during this time. The team at RoadSync recently rolled out their direct payment solution designed to streamline the transaction process between drivers and warehouses.
