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FinTech’s Early Stage Stars Of 2017 & 2018 (So Far)

The progress mobile and computer tech have made over the past ten years has changed the way that entrepreneurs think about solving problems and the way consumers think about accessibility. Our daily transactions are more frequently taking place online or through smartphone apps. One of the most critical categories to have come out of this movement is financial technology, better known as FinTech.

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Nowadays, splitting bills, filing taxes, and even paying for coffee has evolved with consumer technology. And funding in the space has tracked north as FinTech innovation itself has matured.

According to Crunchbase Data, $28 billion has been funneled into 3,609 rounds for US-based seed, early and late-stage FinTech related startups since January 2008. Of that $28 billion, $7 billion has been invested since January 2017.

Who raised the money? The FinTech startups include tech companies with products in the payments, personal finance, tax, insurance, lending, banking, and credit categories.

Here’s what the category’s funding curve has looked like:

Seed, Series A, and Series B rounds accounted for 90 percent of the total rounds. The amount of deals and dollars directed toward seed and early-stage companies increased 506 percent from 2009 to 2015 before declining slightly along with the overall space in 2016.

FinTech-related early-stage and seed startups raised $2.38 billion dollars over 407 rounds in 2017. Though the total number of deals and known total dollars for seed and early-stage startups is less than 2016’s high, the average dollar amount for deals of known values peaked in 2017 at $7.7 million.

38 percent of those startups funded last year were headquartered in California, but other regions are heating up as well. As Crunchbase News recently reported, players like NYC-based alternative credit card company Petal are giving credit to the New York FinTech scene. The same goes for the southeastern side of the states, with companies like Virginia-based veteran lending platform Streetshares and Atlanta-based kid-friendly debit card service Greenlight starting the year off right in the space.

With that in mind, we decided to take a look at rising players in the FinTech related industries mentioned above. We compiled a list of 20 seed and early-stage U.S.-based startups that have raised since January 2017. The data was organized based on the amount raised in the companies’ last funding rounds with the largest round at the top of the list. Companies that raised the same amount are organized alphabetically.

InsureTech

One startup looking to break into the insurance tech field is The Zebra, which raised a $40 million Series B led by Accel Partners in September 2017.

Founded by Adam Lyons and Joshua Dziabiak in 2012, the company aims to become the “Kayak of auto insurance” by making the quoting and purchasing process more transparent and accessible.

According to a press release, The Zebra has “partnered with 80 percent of the top 25 auto insurance companies.” It sells directly on its site and on behalf of insurance providers in some states, according to Fortune. The company released a feature in October which allows drivers to look at the factors that inform their insurance rates.

The company had previously raised $17 million in a Series A by Ballast Ventures, Mark Cuban, and others. The Zebra’s last funding round brings the company’s total known funds raised to $63 million.

Investment Tech

Another interesting player on our list is Ellevest, a digital investment platform tailored toward women. Having personally faced the reality of the gender related issues in venture and tech, Sallie Krawcheck founded Ellevest in 2014 with the goal to fill the gender gap and help women build portfolio investments from earned capital. According to its website, the platform relies on data driven research to create investment portfolios with individualized goals.

In September, the company raised a $34.6 million Series A round led by Rethink Impact, a group which focuses on impact investment in female leaders in technology. Ellevest had previously raised $11.5 million in a Seed round led by Morningstar in September 2015.

Mobile Banking

The fifth company on the list above, Varo, is a personal mobile banking application that wants to end traditional banking. It provides fee-free checking accounts, savings accounts, and personal loans, while allowing its users to balance spending and income factors. The company was founded in 2015 and just raised a $45 million Series B in January 2018 led by Warburg Pincus and impact investment firm The Rise Fund.

“The way people are earning and spending money is changing,” Head of Communications, Emily Brauer Gill told Crunchbase News in an email. “The velocity of money and transaction volumes by individuals is increasing, especially on non-prepaid debit cards.”

Brauer Gill believes that growth opportunities for Varo are found in connected young adults who “don’t want to pay fees or read through obscure fine-print, and want a brand that represents their social missions and outlook.” And as far as growth in the FinTech space in general, she believes that financial technology is making processes more transparent, efficient, and less costly.

“Technology is increasing access and providing services to new groups of people who had been shut out from high-quality services in the past. Consumer banking is no different,” she explained further. “Technology is democratizing access to financial services across the board.”

In total, the company has raised $78.4 million for its millennial mobile banking platform. The company previously raised $28.4 million from Warburg Pincus in a private equity round in May 2016, as well as $5 million in debt financing from Silicon Valley Bank in 2017 for its lending program launched that year.

Illustration: Li-Anne Dias