Despite slowdown, local fintech investors and founders remain optimistic

2021 was the year of fintech. One out of every five venture dollars invested went into the sector, according to CB Insights. Fintech M&A, IPOs, and exits nearly doubled year-over-year as well.

2022 has been a bit of a rockier time for fintechs, prompted by the general VC slowdown and subsectors like 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 dropped since its peak in 2021, quarterly VC investments in fintech companies are still higher than they were in 2020,” said Neil Kapur, Partner at Atlanta-based TTV Capital. “We’ve invested in early-stage fintech startups for the past two decades, and our firm has seen all types of macroeconomic conditions and market shifts. Through it all, our investing strategy hasn’t changed. We’re always on the lookout for early-stage fintech companies that are solving a critical unmet need and have a path to profitability, led by dynamic founders with a big vision. We will always be optimistic about fintech because we’ve seen firsthand how new ideas can dramatically improve the ways 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 rounds 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 space that raised significant rounds of funding in 2020 and 2021, like RoadSync ($30 million Series B) and Greenlight ($260 million Series D).

Two of the more recent rounds have closed up in North Carolina. Viably, based out of 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 launching its SMB-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 comes from existing Apiture clients, according to COO Chris Cox. “Their investment reinforces the strength of Apiture’s digital banking solutions in a competitive market. Apiture’s sound 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 that 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 across our portfolio over the years. We’re witnessing an expansion from fintechs being focused on building traditional financial services products to companies that are leveraging fintech as a core component of their business model — and that’s a winning play,” Kapur added.

The payment subsector (including real-time payments, buy-now-pay-later, and B2B payment options) continues to grow both in terms of the number of investments and overall M&A activity. Rapid electronic payment acceptance, demand for consumer-friendly payment services, and “significant dry powder and interest from both strategic and financial buyers” could help fuel growth in the sector moving forward, according to a KPMG report.

That could be good news for the local payment-centric fintech space.

Atlanta-based Sionic recently announced the launch of the first ‘pay-by-bank’ real-time payment option for U.S. merchants. This allows merchants to bypass credit card fees and receive direct cash deposits.

Sionic believes this is part of the “great reallocation in digital payments” that closes the gap on point-of-sale deposits. Ronald Herman, Sionic Founder and CEO, told Hypepotamus that instant digital bank payments are a “new way to more equitably reallocate value back to merchants and consumers – the backbone of the U.S 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 for just about everything, layoffs and a spike in personal/credit card debt, Sionic offers consumers a path back to sensible spending – Pay-by-Bank provides a safe and easy way to help control budgets. This is a good step forward in helping merchants combat inflation. Similarly, from local businesses to global enterprises, merchants remain trapped paying rising credit card fees. For merchants, direct cash deposits in their bank accounts within seconds at POS cuts card swipe fees and helps offset growing labor and product costs.”

This pay-by-bank option is an extension of Sionic’s ULink commerce platform, which allows for same-day ACH payments.

Sionic isn’t the only local fintech launching new payments-focused products during this time. The team over at RoadSync recently announced its new direct payment solution designed to streamline the transaction process between drivers and warehouses.