Caution about the lingering impact of the coronavirus pandemic has given way to confidence as economies rebound and capital pours into the sector at record rates, driving up valuations. In the first half of this year, fintech companies raised 24% more venture capital funding than they did through the whole of 2020. Additionally, there has been a boom in public listings, but this has also been accompanied by a broader surge in all types of M&A activity, including several instances of the finance industry’s largest players picking off start-ups.
“I don’t think anyone predicted quite how intense the funding and M&A activity was going to be,” said Keith Grose, Plaid head of international. Ironically, however, the impact of Covid also helped drive the eventual boom: “More investors and companies have more dry powder saved up than anticipated, and the industry has gone through a step change in terms of adoption [of digital services],” Grose said. “So it seems more obvious in retrospect why fintech has grown into such a huge sector in terms of activity in the past few months.”