EMERGING TECH RESEARCH

Fintech Report
VC trends and emerging opportunities

Q1
2022
Contents
Vertical overview 3 Institutional Research Group
Analysis
Q1 2022 timeline 4
Robert Le Senior Analyst, Emerging Technology
Fintech landscape 5
robert.le@pitchbook.com

Fintech VC ecosystem market map 6 pbinstitutionalresearch@pitchbook.com

Data
VC activity 8
TJ Mei Data Analyst
Emerging opportunities 17

Corporate crypto finance 18 Publishing

Carbon credit tokenization 20
Report designed by Julia Midkiff

Payfac enablement 22 Published on May 5, 2022

Select company highlights 25

Bitwave 26

Celo 27 This report serves as a quarterly snapshot of the fintech

vertical in Q1 2022. For a comprehensive, detailed analysis
OpenNode 29
of the fintech industry by segment, please see our latest
annual report.

Q1 2022 Fintech Report CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 2

Vertical overview
The steady transformation of financial services toward digitization and online channels has accelerated
over the past couple of years, benefiting the growing ecosystem of fintech startups seeking to address Figure 1. Fintech VC deal activity by quarter
emerging opportunities. Mobile wallets, slow to gain adoption in the US, saw the percentage of use by
adults jump from about 30% before the pandemic to 58% in 2020, and then a further increase to 68% $40 1,600

in 2021.1 Partly due to lockdown boredom, retail investors flocked to mobile trading apps, leading to a
jump in average US equities trading volume of 34% YoY in October 2021.2 These industry tailwinds will $35 1,400

continue to drive investment capital into fintech companies across both private and public markets.
$30 1,200
While some areas of fintech—such as neobanks and real estate lending platforms—are maturing and
attracting relatively more late-stage growth and public capital, other areas—such as decentralized
$25 1,000
finance (DeFi) and autonomous finance—have just begun raising early-stage institutional capital.
These growth trends are converging with several other important disruptive forces impacting the
$20 800
financial services ecosystem, including real-time payments, real-time transaction settlement, and core
banking migration. These long-term transformational trends continue to attract investment across a $15 600
range of stakeholders—including financial institutions, governments, and corporations.
$10 400
The financial services sector has largely benefited from the COVID-19 pandemic as governments
and central banks took cues from the global financial crisis (GFC) and pumped cash into the global $5 200

economy. Many big banks that set aside loan loss provisions during the pandemic’s early days never
saw those losses materialize. Consumers used government stimulus checks to repay debts, while $0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
many businesses were granted government-guaranteed loans serviced by the private banking system.
2018 2019 2020 2021 2022*
Capital deployment also grew in capital markets, where trading volumes increased across virtually all
Deal value ($B) Deal count
asset classes, generating significant fees for banks, brokerages, and other trading intermediaries.

Source: PitchBook | Geography: Global | *As of March 31, 2022

1: “Fintech Adoption” survey conducted by The Harris Poll, Fiserv, November 2021.
2: Global Retail Trends Report, DriveWealth, Q3 2021.

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 Q1 2022 timeline Q1 VC deal count summary

1,233
total deals

January 7 March 9 March 21

-3.7%
QoQ growth
PayPal confirms it is developing a stablecoin President Biden issues an executive order calling for The SEC proposes new rules that
News

News

News
after “PayPal Coin” was discovered within
the code of its iPhone app. This trend
researching and supporting digital assets, including
an exploration of a US central bank digital currency
would compel public companies
to disclose carbon emissions
-6.5%
follows other major companies, including (CBDC). This comes as over 90 other countries around and the impact of climate YoY growth
Visa, developing stablecoin strategies. the world are evaluating or piloting CBDCs. change on their businesses.
39.0%
YTD growth
Jan 1

Feb 1

Mar 1

Mar 31
Q1 VC deal value summary

January 22 January 31 March 22 $29.3B

The Diem project sells its technology assets FTX raises a $400.0 million Series C at Forge Global, an exchange for private total deal value
VC deal

VC exit
News

to Silvergate for around $200 million. Led a $32.0 billion post-money valuation. company shares, completes a deSPAC
by Facebook, and originally called Libra, the Late-stage crypto companies for one of the largest VC exits during the -7.3%
project aimed to bring stablecoins to the continue to see strong valuation quarter. We expect fintech exits to remain QoQ growth
masses. growth during the quarter. relatively muted over the next few quarters.

13.8%
YoY growth

113.0%
YTD growth

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Fintech 2

landscape 7
4

1 Alternative lending
5
2 Capital markets

6
3 Consumer finance

4 Digital assets
3
5 Financial services IT

6 Payments

7 Regtech

8 Wealthtech

1
8

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Fintech VC ecosystem market map
Market map is a representative overview of venture-backed or growth-stage providers in each segment.
Click to view the interactive market map on the PitchBook Platform.
Companies listed have received venture capital or other notable private investments.

Alternative lending Capital markets Consumer finance Digital assets

Commercial lending Alternative capital Credit & BNPL Cryptocurrency wallets & exchanges

Microlending Infrastructure Digital banking Decentralized finance

Real estate lending Market data & analytics Loyalty & rewards Institutional services & infrastructure

Retail & marketplace lending Trading Personal financial management Layer-1 & scaling solutions

Underwriting & credit scoring Wallets & super apps

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Fintech VC ecosystem market map
Market map is a representative overview of venture-backed or growth-stage providers in each segment.
Click to view the interactive market map on the PitchBook Platform.
Companies listed have received venture capital or other notable private investments.

Financial services IT Payments Regtech Wealthtech (cont.)

Enterprise architecture B2B payments Crime surveillance Advisortech

Cross border & FX Alternative investments

Platforms & APIs Regulatory affairs & compliance

P2P & remittance Brokerage

Risk management

Payment platforms & POS Digital advisory

Wealthtech

Payroll & AP/AR automation Retirement planning Investment tools & platforms

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VC activity
In Q1 2022, fintech companies globally raised $29.3 billion in VC across 1,233 deals, representing
a 7.3% decrease in QoQ deal value. However, this still represents a 13.8% YoY increase. Payments Figure 2. Fintech VC deal activity
companies continue to lead the largest portion of deal value, at $9.1 billion, representing 12.4%
QoQ growth. Checkout.com, a Stripe direct competitor, raised the largest round of the quarter in 5,236

the segment: a $1.0 billion Series D at a $40.0 billion post-money valuation. Other notable payment
deals of the quarter include one-click checkout platform Bolt ($355.0 million Series E at a $11.0 billion
valuation), two rounds from B2B payments and expense card management companies: Qonto,
which raised a $549.8 million Series D at a $5.0 billion post-money valuation, and Brex, which raised
a $300.0 million Series D2 at a $12.3 billion post-money valuation. Alternative lending also had a 3,278
3,314 3,315
strong quarter, with some of the largest deals in the segment going to fintech companies outside
of the US. These deals include a $294.0 million Series C for Singapore-based small and medium- 2,626

sized enterprise (SME) lending platform Funding Societies, a $260.0 million Series F for Brazil-based 2,231
consumer lender Creditas, and a $189.2 million late-stage VC round for UK-based consumer loan 2,080

origination and servicing platform Oakbrook Finance. Consumer finance and financial services IT 1,483
companies had the largest VC investment contractions during the quarter, declining 40.8% and 1,233
72.7% QoQ, respectively. 1,010

662

During the quarter, the median pre-money valuation for VC-backed, late-stage fintech companies
increased 44.5% to $257.5 million from 2021’s full-year figure of $178.3 million. Early-stage median $2.5
$3.6
$9.9 $20.7 $25.5 $21.6 $54.5 $45.5 $47.0 $122.0 $29.3
pre-money valuations also continued to increase, reaching new highs at $63.0 million—up 57.5%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*
from 2021. This leads to the highest pre-money valuation step-ups, a measure to gauge valuation
Deal value ($B) Deal count
accretion between stages, for both early- and late-stage fintech companies, which reached 3.1x and
2.5x, respectively.
Source: PitchBook | Geography: Global | *As of March 31, 2022

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VC ACTIVITY

Fintech venture exits slowed considerably during the quarter, ending March with only $8.7 billion
in exit value. This is not surprising considering that fintech companies exited primary via public Figure 3. Fintech VC exit activity
markets in 2021, and IPO activity has now ground to a halt due to macroeconomic conditions. The
two largest VC exits for the quarter were deSPACs for neobank Dave and private stock exchange
391
Forge Global. While stability in the public markets remain uncertain, we believe that many fintech
companies will become acquisition targets of incumbents and well-established fintech companies.
Because of this, we expect VC exits in 2022 to shift from primarily public listings to M&A.

217
205

163

131

96 98

56 79
39 41

$9.6 $16.8 $18.3

$5.2 $2.5 $7.7 $3.4 $32.5 $37.7 $367.1 $8.7

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*
Exit value ($B) Exit count

Source: PitchBook | Geography: Global | *As of March 31, 2022

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VC ACTIVITY

Figure 4. Median fintech VC deal size ($M) by stage Figure 5. Median fintech VC pre-money valuation ($M) by stage

$25 $22.8 $300

$257.5
$20.0
$250
$20
$200 $178.3
$15
$150
$10 $7.7
$6.5 $100 $63.0
$5 $3.0 $50 $40.0
$2.1 $10.0
$8.9
$0 $0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022* 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*

Angel & seed Early-stage VC Late-stage VC Angel & seed Early-stage VC Late-stage VC

Source: PitchBook | Geography: Global | *As of March 31, 2022 Source: PitchBook | Geography: Global | *As of March 31, 2022

Figure 6. Fintech VC exit value ($B) by type Figure 7. Fintech VC exit count by type

$400 Public listing 400 Public listing

Acquisition Acquisition
$300 Buyout 300 Buyout

$200 200

$100 100

$0 0

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022* 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*

Source: PitchBook | Geography: Global | *As of March 31, 2022 Source: PitchBook | Geography: Global | *As of March 31, 2022

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VC ACTIVITY

Figure 8. Key fintech seed deals*

Company Close date Segment Stage Deal size ($M) Lead investor(s)

Ark Kapital March 29, 2022 Capital markets Seed $181.6 LocalGlobe

Vartana January 20, 2022 Payments Seed $57.0 Audacious Ventures

Acasa March 8, 2022 Alternative lending Seed $37.7 Quona Capital

Lendai March 9, 2022 Alternative lending Seed $35.0 Cardumen Capital, Meron Capital

FlyCoin February 8, 2022 Consumer finance Seed $33.0 Josh Jones

Dash March 7, 2022 Consumer finance Seed $32.8 Insight Partners

Yonder March 31, 2022 Consumer finance Seed $26.3 LocalGlobe, Northzone Ventures

Karmen January 24, 2022 Capital markets Seed $25.0 Fasanara Capital

Cape March 22, 2022 Payments Seed $24.1 N/A

Ponto Software March 17, 2022 Digital assets Seed $20.0 General Catalyst, NOMO Ventures, Polychain Capital

Source: PitchBook | Geography: Global | *As of March 31, 2022

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VC ACTIVITY

Figure 9. Key fintech early-stage VC deals

Company Close date Segment Stage Deal size ($M) Lead investor(s) Valuation step-up*

Scalapay February 23, 2022 Consumer finance Series B $497.0 Tencent Holdings, Willoughby Capital 1.1x

FTX US January 26, 2022 Digital assets Series A $400.0 N/A N/A

Edly March 9, 2022 Alternative lending Early-stage VC $175.0 Medalist Partners (New York), Windmuehle N/A

Arc Technologies January 13, 2022 Capital markets Early-stage VC $161.0 NFX N/A

Selina Advance February 8, 2022 Alternative lending Series B $150.0 Lightrock 1.8x

Optimism March 17, 2022 Digital assets Series B $150.0 Andreessen Horowitz, Paradigm (Crypto Fund) N/A

Wayflyer February 1, 2022 Alternative lending Series B $150.0 DST Global, QED Investors N/A

Silvr February 8, 2022 Capital markets Series A $147.4 N/A N/A

Tonik February 9, 2022 Consumer finance Series B $131.0 Mizuho Bank N/A

iTrustCapital January 19, 2022 Wealthtech Series A $125.0 Left Lane Capital N/A

Source: PitchBook | Geography: Global | *As of March 31, 2022

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VC ACTIVITY

Figure 10. Key fintech late-stage VC deals

Company Close date Segment Stage Deal size ($M) Lead investor(s) Valuation step-up*

Checkout.com January 12, 2022 Payments Series D $1,000.0 N/A 2.6x

Fireblocks January 27, 2022 Digital assets Series E $550.0 D1 Capital Partners, Spark Capital 0.4x

Qonto January 10, 2022 Payments Series D $549.8 TCV, Tiger Global Management 4.9x

ConsenSys March 11, 2022 Digital assets Series D $450.0 N/A 2.1x

FTX January 31, 2022 Digital assets Series C $400.0 N/A 1.26x

Market Financial Solutions March 21, 2022 Alternative lending Late-stage VC $398.0 N/A N/A

Bolt Financial February 9, 2022 Payments Series E $355.0 BlackRock 1.8x

Lunar March 10, 2022 Consumer finance Series D $314.1 Heartland, IDC Ventures, Kinnevik, Tencent Holdings N/A

GoCardless February 8, 2022 Payments Series G $312.0 Permira 6.9x

Brex January 11, 2022 Payments Series D2 $300.0 Greenoaks Capital Partners, TCV 1.6x

Source: PitchBook | Geography: Global | *As of March 31, 2022

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VC ACTIVITY

Figure 11. Key fintech VC exits

Post-money valuation
Company Close date Subsegment Exit size ($M) Exit type Acquirer(s)/index
($M)*

Dave January 4, 2022 Digital banking $3,536.0 Public listing VPC Impact Acquisition Holdings III $4,000.0

Forge Global March 22, 2022 Alternative capital $1,349.0 Public listing Motive Capital $2,000.0

SimpleNexus January 10, 2022 Platforms & APIs $1,200.0 Acquisition nCino $1,200.0

Technisys March 3, 2022 Enterprise architecture $1,100.0 Acquisition SoFi $1,100.0

Fair March 15, 2022 Retail & marketplace lending N/A Acquisition Shift Technologies N/A

Pollinate February 4, 2022 Platforms & APIs N/A Acquisition Canadian Imperial Bank of Commerce N/A

Taulia March 10, 2022 Commercial lending N/A Acquisition SAP N/A

Terraform Labs March 9, 2022 Layer-1 and scaling solutions N/A Acquisition BTCS N/A

CommerceSync February 24, 2022 Payroll and AP/AR automation N/A Acquisition Constellation Software, FOG Software Group N/A

Payrix February 14, 2022 Payment platforms & POS N/A Acquisition Fidelity National Information Services N/A

Source: PitchBook | Geography: Global | *As of March 31, 2022

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VC ACTIVITY

Figure 12. Top strategic acquirers of fintech companies since 2012 Figure 13. Top VC investors in fintech companies since 2012

Name Deal count* Name Deal count*

Global Payments 10 500 Global 324

Thomson Reuters 8 Andreessen Horowitz 215

Paysafe Group 6 Coinbase Ventures 199

FactSet Research Systems 6 Digital Currency Group 197

Block 6 Global Founders Capital 197

Source: PitchBook | Geography: Global | *As of March 31, 2022

Ribbit Capital 190

QED Investors 185

Accel 184

Alumni Ventures 149

Index Ventures 146

Source: PitchBook | Geography: Global | *As of March 31, 2022

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VC ACTIVITY

Figure 14. Key fintech VC-backed companies

Company VC raised to date ($M)* Segment

Gojek $6,801.0 Consumer finance

Klarna $3,898.6 Consumer finance

Generate $3,252.1 Capital markets

JD Digits $3,141.3 Consumer finance

Chime $2,646.6 Consumer finance

Stripe $2,235.0 Payments

Suning Finance $2,211.8 Consumer finance

FTX $1,868.7 Digital assets

Revolut $1,854.2 Consumer finance

Checkout.com $1,830.0 Payments

Source: PitchBook | Geography: Global | *As of March 31, 2022

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 Corporate crypto finance

The rise of crypto and web3 leads to

a demand for novel corporate finance
software

Carbon credit tokenization

Emerging opportunities Carbon offsets traded on blockchains is

a leading solution to match supply with
demand

Payfac enablement

Scaled marketplaces and platforms are

seeking to bring payments in-house
Corporate crypto finance
The evolution of the software stack for traditional corporate finance has helped finance teams The COVID-19 pandemic shifted the nature of work toward a more distributed, remote, and
manage and automate numerous processes, including payments, payroll, financial planning and fractionalized version of the gig economy—dubbed the contributor economy. This new work
reporting, cash flow planning, budgeting, and business forecasting (for further reading, please model is largely occurring within web3, particularly within community-based organizational
see our Q1, Q2, and Q3 2021 VC updates). Now, the role of traditional corporate finance is quickly structures known as decentralized autonomous organizations (DAOs), which also require unique
changing with the adoption of new financial paradigms around crypto, DeFi, and web3. crypto-based financial management capabilities. DAO contributors are typically anonymous,
contribute to multiple DAOs, and are compensated (often in crypto) based on specific tasks or
As many companies begin to develop crypto strategies—including investment, payment, project completion. As the number of DAOs proliferate and contributor pools swell, the complexity
and customer services—corporate finance teams are concurrently tasked with developing for both DAO operators and contributors to manage and navigate compensation structures has
needed accounting, risk management, and compliance methodologies. With limited guidance increased exponentially. Furthermore, there are many novel financial operations within DAOs, such
from accounting standard-setting bodies—such as the American Institute of Certified Public as distributing grants and rewards for contributors, paying via multisig, managing gas costs, and
Accountants (AICPA), Financial Accounting Standards Board (FASB), and International Financial conducting airdrops. This has led to a strong demand for ad hoc financial software that can help
Reporting Standards (IFRS) —or financial regulators—such as the US Securities and Exchange manage, simplify, and automate corporate finance activities for DAOs.
Commission (SEC), the UK Financial Conduct Authority (FCA), and European Securities and
Markets Authority (ESMA)—the treatment and accounting of crypto-related economic activities Parcel develops financial tools for DAOs that include mass payouts, contributor payments
have been challenging for many companies. Traditional finance (TradFi) software has been slow requests, payroll workflow, financial reporting, and multi-token support. The startup seeks to
to adopt crypto features and services, which has created a gap for startups to develop innovative address several of the financial challenges facing DAOs, including coordination of payouts to
solutions for companies with crypto strategies. contributors. Since funds are distributed from multisig treasuries—to safeguard against stolen
funds—this requires multiple private keys to sign and send transactions. The need to constantly
The current process for companies to buy, sell, and spend with crypto is multifaceted and synchronize, approve, and execute payments can burden operators as their DAOs begins to scale.
challenging, requiring setting up multiple wallets and sometimes on multiple exchanges. While Parcel’s platform enables modular access control, which lets a DAO multisig owners delegate
many institutional crypto offerings exist, such as Coinbase Institutional and BitGo, these services access to select working group leads and contributors. This allows selected individuals (wallets)
are geared toward financial institutions, not toward businesses in sectors such as e-commerce to initiate payouts for operational expenses and payroll without operators losing control of the
or manufacturing. Several startups are pursuing this product gap, including Starlight, a crypto treasury.
management platform that lets companies set up wallets, buy crypto, and track on-chain
expenses. Starlight aims to provide a much more user-friendly and all-in-one platform compared
with the current complex and disjointed solutions on the market.

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CORPORATE CRYPTO FINANCE

Figure 15. Select corporate finance software providers

TradFi/Web2 Crypto/Web3

Cap table management

Payments, billing & invoicing

Accounting, financial planning & reporting

Banking

Spend and expense management

Payroll

Risk management

Source: PitchBook | Geography: Global | *As of March 31, 2022

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Carbon credit tokenization
The climate crisis is well-documented, and voluntary carbon markets (VCM) may be one of the carbon credits within VCMs is typically over-the-counter, onerous, and expensive, with minimal
best solutions to tackle the growing existential threat. Unlike compliance carbon markets mandated buying options for low-volume transactions. This can result in thin markets that tend to only serve
through local governments, VCM are global and enable carbon emitters to offset emissions by the largest corporations. Many startups and DAO protocols have emerged that seek to develop
purchasing carbon credits from projects that remove or avoid additional carbon released into the disintermediated VCM trading solutions at the intersection of crypto and climate, known as
atmosphere. Over the past year, many corporations such as Microsoft, Maersk, and Ikea have regenerative finance (ReFi).
accelerated their net-zero climate goals, which will likely lead to an increased demand for voluntary
carbon credits. While the market is expected to grow to $190 billion by 2030, 3 there are currently One of the most notable ReFi projects, KlimaDAO, facilitates the tokenization of carbon credits
countless pain points among all VCM participants (for more information on VCM, please see our via its native token, KLIMA. KLIMA tokens represent carbon credits tied to a specific carbon
Introduction to Climate Tech). The four key stakeholders within VCM include: offset project and are backed by a pool of nonfungible tokens (NFTs). These NFTs are tokenized
via Toucan, another ReFi startup that develops infrastructure to bridge off-chain carbon assets to
• Project developers: These participants design, build, and implement carbon offset projects that on-chain credits via a carbon credit registry (Verra). We view tokenized carbon credits as a strong
generate carbon credits, with each credit representing the removal or emission reductions of one use case for NFTs since they can have an assessed market value through relevant attributes from
carbon ton specific carbon projects (the value of carbon credits ranges widely based on project type, location,
• Standards bodies and registries: Organizations that set the verification, validation, age, and scope).
quantification, registration, and issuance criteria for carbon credits
• Brokers and exchanges: Intermediaries that facilitate the carbon offset transactions between After tokenization, corporations and individuals can buy KLIMA to hold, trade, or permanently
project developers, registries, and end buyers retire the associated carbon credits to offset emissions. In the six months since its launch in
• End buyers: Companies, governments, or individuals seeking to offset carbon emissions via October 2021, KlimaDAO and Toucan have tokenized roughly 20 million tons of CO2. However,
carbon credit purchases concerns remain about the true value of Klima’s and Toucan’s tokenized carbon credits, which
included older vintages (as old as 2008) tied to low-quality avoidance offsets rather than nature-
Blockchain is one of the most promising technological solutions to VCM challenges prevalent based offsets. Klima asserts that one of its first objectives was to “sweep the floor” of low-quality
within brokers and exchanges. The increased transparency, liquidity, and accountability of carbon credits to increase demand for higher-quality credits. Toucan, for its part, launched a new
blockchains can help reduce double spending, which occurs when retired carbon credits are token in February 2022 that is solely backed by nature-based carbon credits with 10-year rolling
resold or sold multiple times from a single project. The current process to purchase and trade vintages of 2012 or later.

3: “Carbon Offsets Price May Rise 3,000% by 2029 Under Tighter Rules,” Bloomberg Professional Services, Jagteshwar Singh and Tiffanie Tan, March 2, 2022.

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CARBON CREDIT TOKENIZATION

Figure 16. Select carbon credit blockchain companies

Flow Carbon’s full-stack carbon credit tokenization platform provides more optionality than some others
Total capital
on the market, including the ability to reverse the tokenization process to redeem the underlying carbon Company name HQ location Year founded
raised ($M)*
asset. This could be useful for organizations without governance processes to hold crypto on balance
sheets, while still allowing them to benefit from price discovery and quality transparency of tokenized Climatetrade Valencia, Spain 2017 $23.0
markets. Flow Carbon’s GCO2 NFTs also have a relatively higher standard of tokenization, representing
only nature-based projects such as reforestation or wetland restoration with five-year rolling vintages of MOSS Sao Paulo, Brazil 2020 $13.2
2016 or later. Flow Carbon’s fungible token, GNT, is backed by a bundle of GCO2 tokens that can be held,
traded, retired, or used as an asset within the broader DeFi ecosystem (read more about DeFi here). Nori Seattle, Washington 2017 $12.6

We believe that blockchain and NFTs will be the prevailing and most feasible solution for trading voluntary Single.Earth Tallinn, Estonia 2019 $7.9
carbon offsets, yet many challenges remain. The startups building solutions to disintermediate the
Great Barrington,
traditional brokers and exchanges are one fundamental piece of the complex VCM puzzle. Yet as demand Regen Network 2018 $2.7
Massachusetts
and carbon credit prices continue to soar,4,5 we expect these companies to play an increasingly vital role
in the ecosystem. Earthbanc Stockholm, Sweden 2019 $1.5

Cascadia Carbon Portland, Oregon 2019 N/A

Toucan Protocol Berlin, Germany 2020 N/A

Flow Carbon New York, New York 2021 N/A

Klima N/A 2021 N/A

Source: PitchBook | Geography: Global | *As of March 31, 2022

4: “Voluntary Carbon Markets Poised for Growth in 2022,” IHS Markit, January 4, 2022.
5: “State of the Voluntary Carbon Markets 2021,” Ecosystem Marketplace, September 15, 2021.

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Payfac enablement
We have tracked several early- and late-stage investments in startups seeking to disrupt the negotiate volume discounts to get better payment economics, they still must operate within the
payments industry by making it easier for online marketplaces and vertical SaaS platforms to bounds of a payfac’s system, which may limit the ability to build more proprietary experiences. For
develop payment processing capabilities as opposed to purchasing payment services from online marketplaces, bringing payments in-house has the added benefit of enabling the platform
payment facilitators, or “payfacs.” The rise of the digital economy and e-commerce has fueled to monetize payments by offering payment capabilities to other sub-merchants selling on the
strong growth for providers of online payment platforms and payfacs such as PayPal, Square, platform, effectively becoming a payfac provider and generating a new revenue stream.
and Stripe. Payfacs act as middlemen in the payment processing ecosystem and make it easy
for merchants to connect to payment card networks primarily operated by incumbent payment Becoming a payfac has traditionally been a lengthy and costly process. Merchants must not only
processors and banks. Key to the success of payfacs has been their ability to cater to the needs make technological advances, but they also need to obtain payment and money transfer licenses,
of digital commerce by providing APIs that allow online sellers to easily integrate payments incorporate know your customer (KYC) diligence, and assume fraud-related risks. (If merchants
acceptance into their apps or websites, whereas traditional providers often have very limited are becoming payfacs in order to offer submerchant payment accounts, this will require
digital capabilities. underwriting and merchant services capabilities.

While payfacs tend to charge fees in the range of 2% to 3% per transaction, this is generally offset A relatively newer class of startups is focused on the opportunity to help marketplaces and
by the value they bring—particularly for smaller merchants—in the form of easy onboarding independent software vendors (ISVs) become payfacs more easily. Finix is a payfac enabler
and access to robust payment systems, eliminating the need to make significant investments in that utilizes a single API that allows platforms set up in-house payments and comes with preset
payments infrastructure. However, as online sellers become larger and more sophisticated, there payment forms, managed payouts, and merchant onboarding. Finix also gives platforms the option
are several reasons they may wish to cut out the payfac and bring payments fully in-house. These to build their own merchant underwriting methodologies and fraud detection systems or the
include the ability to have more control of transaction costs (by dealing directly with the payment ability to use Finix’s custom solutions. Tilled, another payfac enabler, offers a more fully managed
bank and not the payfac) and the freedom to build fully custom payment experiences that may solution, a “PayFac-as-a-Service” platform with a simple pricing model: 66% of transaction
not be possible with third-party payment intermediaries. While larger merchants can often revenue share, 7 bps, and $.05 per transaction.

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PAYFAC ENABLEMENT

Figure 17. Pacfac enablers within the payments stack

Issuing banks Issuing processor Card networks Acquiring processors & banks

Merchant

Payfacs Submerchant
Customer

Submerchant

Submerchant

Payfac enabler ISVs & marketplaces

Submerchant

Submerchant

Submerchant

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PAYFAC ENABLEMENT

Figure 18. Select payfac enablement startups

Latest deal amount

Company name HQ location Year founded Total raised ($M) Latest deal date Latest deal type
($M)

Finix San Francisco, California 2015 $97.5 February 24, 2021 Late-stage VC $3.0

PayStand Scotts Valley, California 2013 $85.5 July 23, 2021 Series C $50.0

Payrix Sandy Springs, Georgia 2015 $50.0 February 14, 2022 Merger/acquisition** N/A

Tilled Boulder, Colorado 2018 $24.2 February 16, 2022 Series A $11.0

Amaryllis West Palm Beach, Florida 2011 $3.0 May 1, 2018 Seed $3.0

PayEngine Santa Monica, California 2020 $1.6 August 18, 2021 Seed $1.6

Infinicept Denver, Colorado 2014 N/A June 16, 2020 Late-stage VC N/A

Agile Payments N/A 1999 N/A N/A N/A N/A

Source: PitchBook | Geography: Global | *As of March 31, 2022

**Acquired by FIS in February 2022

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Select company highlights
BITWAVE

Founded Total raised: Last financing: Lead investors:

2018 $7.3M Raised $7.3M in a seed round Blockchain Capital

Located
San Francisco, CA

Overview Leadership
Bitwave is a financial software that helps businesses bring digital assets onto their balance Bitwave was cofounded by CEO Patrick White and COO Amy Kalnoki. White previously founded
sheets and business processes. The financial platform provides cryptocurrency tax, accounting, Synata, an enterprise search engine that was acquired by Cisco. White also held technical roles
monitoring, and compliance, enabling enterprises to manage their digital assets transactions. at various technology companies, including at Cisco, Fortify Software, and Microsoft. Kalnoki
Syncing cryptocurrencies holdings with accounting systems has been a challenge for businesses. previously held marketing and sales roles at Cisco, Synata, BrightTALK, and Hearst.
The Bitwave platform reconciles transactions on the blockchain directly into businesses’ existing
accounting and ERP systems such as Quickbooks, Xero, and NetSuite. It does this by monitoring all Financing history
transactions on multiple digital asset sources including wallets, exchanges, blockchain addresses,
and internal/external ledgers. Since every crypto transaction could be a taxable event, Bitwave In March 2021, Bitwave raised an undisclosed amount from Forum Ventures. In August of the same
calculates the cost basis and potential tax liability for every transaction based on short- and long- year, the company raised $7.3 million of seed funding in a deal led by Blockchain Capital. Nascent
term capital gains. Ventures, XBTO Humla, Rowan Trollope, Arca, and Nima Capital also participated in the round. The
funds will be used to expand its software capabilities and grow its client base.
A unique feature of the Bitwave platform is native support for DeFi, letting businesses account for
and manage taxes for holdings in lending and liquidity pools, yield farms, and staking contracts.
The company currently counts OpenSea, Figment, Rarible, and Messari as its customers.

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CELO

Founded Total raised: Last financing: Lead investors:

2017 at least $57.2 million Raised $20.0M in a Series A Andreessen Horowitz

Located
San Francisco, CA

Overview Leadership

Celo is a mobile-first, Layer-1 blockchain compatible with the Ethereum Virtual Machine (EVM). Celo was cofounded by President Rene Reinsberg, CTO Marek Olszewski, and Sepandar Kamvar,

The protocol leverages a proof-of-stake consensus mechanism to enable faster and cheaper who all met during their time at Massachusetts Institute of Technology. Reinsberg and Olszewski

transactions than Ethereum. Celo differs from many other Layer-1 blockchains in that it targets previously founded Locu, a platform that connected local businesses with consumers. Kamvar

disadvantaged users, including many in developing countries with low-end smartphones and basic served on the board of Locu. Locu was acquired by GoDaddy for $70 million through its financial

internet connections. Instead of public keys, which are typically 256-bit encryption keys that are sponsors KKR, Silver Lake, and TCV. Reinsberg and Olszewski stayed at GoDaddy for around three

42 characters long and used by many other Layer-1s, Celo’s dApps only require a phone number years running product and engineering, respectively, before leaving in 2017 to cofound Celo along

for users to access services. The blockchain’s lightweight design also enables it to overcome high- with Kamvar.

latency and low-bandwidth difficulties prevalent in many other blockchains. These features enable
applications built on Celo to have a lower barrier to entry and reach a wider audience. Celo also
aims to be a carbon-negative blockchain by contributing funds from the network to carbon offsets.
Many ReFi startups develop on or work with Celo, including Flow Carbon, Loam, MOSS, and Regen
Network.

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CELO

Figure 19. Celo financing history

Late-stage VC Late-stage VC Series A Late-stage VC Accelerator/Incubator Early-stage VC

July 2021 April 2021 February 2021 January 2020 September 2018 June 2018

Total raised: Round size: Round size: Round size: Round size: Round size:
N/A N/A $20.0M $30.7M N/A $6.5M
Pre-money valuation: Total raised: Total raised: Total raised: Total raised: Total raised:
$57.2M $57.2M $57.2M $37.2M $6.5M $6.5M
Investors: Investors: Investors: Investors: Investors: Investors:
Prosus, Hack VC, Birchaven Group, T-Systems International, Andreessen Horowitz, Greenfield Andreessen Horowitz, Spectra Google for Startups Accelerator Coinbase Ventures, Andreessen
Intersection Fintech Ventures Caffeinated Capital, DTCP and One, Electric Capital, Floem Capital, Investments, CMT Digital, Horowitz, General Catalyst, Social
Deutsche Telekom KSK Angel Fund Dragonfly Capital Partners, Electric Capital, 9Yards Capital, Dragonfly
Capital, Future\Perfect Ventures, Capital Partners, Polychain Capital,
Polychain Capital, Valor Capital among others
Group

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OPENNODE

Founded Total raised: Last financing: Lead investors:

2018 $25.0M Raised $220.0M post-money Draper Associates,
Kingsway Capital
Located
Los Angeles, CA

Overview Leadership
OpenNode develops bitcoin processing infrastructure that lets ISVs and marketplaces integrate OpenNode was cofounded by CEO Afnan Rahman and CTO Joao Almeida. Rahman and Almeida
bitcoin payment services into their platforms. Platforms can accept, pay out, and invoice bitcoin previously worked together at Masen, a bitcoin-focused design and technology studio founded
by using the startup’s APIs, plugins, or hosted checkout pages. OpenNode settles payments via by Rahman. Joshua Held runs strategy at OpenNode, and previously led strategy at HERBL (raised
the bitcoin Layer-2 blockchain, the Lightning Network, ensuring faster, cheaper, and more reliable $122.0 million in VC), a supply chain platform for the cannabis industry.
transactions. Merchants choosing to accept bitcoin as payment can convert to local currencies
in real time and benefit from a lack of chargebacks since bitcoin transactions are irreversible. Financing history
Platforms including Shopify, Substack, and Twitter enables bitcoin payments via OpenNode.
The company has raised multiple investment rounds, including a $250,000 angel round, a $1.3
The biggest challenge for OpenNode will be payfacs and other payment processors enabling million seed round from Draper Associates in December 2018, a $3.5 million early-stage VC
bitcoin payments. While these payment providers have been slow to respond to cryptocurrency round, and a $20.0 million Series A round led by Kingsway Capital in February 2022. Twitter, Avon
developments, this could change in the near future. Stripe, which discontinued its bitcoin Ventures, Visary Capital, and Tim Draper also participated in the round.
payments product in 2018, launched a crypto product in early Q2 2022, enabling its merchants to
accept payments in the USDC stablecoin.

Q1 2022 Fintech Report CONFIDENTIAL. NOT FOR REDISTRIBUTION. PG 29

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