Revenue-based financing: disrupting debt or venture capital?

Venture capital funding has grown massively in recent years. More than $530B has been invested in startups globally in 2021, more than 3x the $165B in 2015 and 14x the $38B in 2010. VC funding has also expanded in its geographic scope. In 2010 more than 70% of all VC funding was invested in the US, this has now decreased to 50%, with emerging economies rising to more than 20%. 

However, VC funding is not suitable and accessible for most companies. Less than 1% of the new companies created ever raise venture capital funding. Some fail before raising, some have to find other ways to grow. In particular, there are thousands of growing or profitable small businesses which need growth capital. Other times VC funding is just not the best option possible.

This is where revenue-based financing comes in.

A breed of new startups offers an alternative to private equity and early-stage venture investments or debt, allowing startups and SMEs to get financing without giving up equity or the burden of not flexible debt conditions. The money is repaid as a percentage of future revenues, which means that if sales struggle, the company will have more time to pay, otherwise it will repay the debt quickly.

We identified 30+ revenue-based financing startups, which raised $1.8B in equity and debt across 32 rounds in 2021, 7x than last year.

In other news

🦄 Italian neobank Illimity has become a unicorn. The digital bank announced record profits and lending in Q3 2021 - Illimity.

 
🚀 The Fintech Job Report 2021 - CFTE. Fintech now employs more than many financial centres.

📚 New York’s incoming mayor says crypto should be taught in schools - CBNC. 

🚨 Binance is freezing clients account until users return DOGE they do not have  - CoinDesk

⚡Goldman Sachs: Gold Is Becoming Poor Man's Crypto - BitcoinNews. While Europe must ban Bitcoin mining to hit the 1.5C Paris climate goal, say Swedish regulators - EuroNews

🌳 Klima DAO accumulates $100M of carbon offsets, aims to drive up price - Cointelegraph

Latest fintech deals:

The largest this week

🇺🇸 Forte has raised an additional $725M to keep building a compliant, interoperable blockchain gaming platform. Check out our deep dive on blockchain gaming.

🇺🇸 Socure, a company that uses AI and machine learning to verify identities, raised a $450M Series E at a $4.5B valuation led by Accel and T. Rowe Price. Socure’s customer base includes 12 of the top 15 banks and a roster of fintech companies, online gaming providers and crypto exchanges. Here for an overview of AML.

🇭🇰 Qupital raised a $150M Series B with participation from Citi and Alibaba to scale its e-commerce financing platform. Discover 50+ trade and supply chain finance companies.

🇲🇽 Stori, a Mexican fintech bringing credit cards to the country's middle class, has raised $125M in a Series C funding round, adding another $75 million in debt financing. Credit cards were the successful entry point for Nubank in Brazil and the giant is now pushing in Mexico in the same way. Discover 50+ challenger banks in South America.

🇨🇦 Wrapbook, which offers a platform for onboarding, timecards, payroll, and insurance, raised a $100M Series A from Tiger Global and A16z. Payroll focused fintech startups have raised $1.5B in 2021.

Other notable fintech deals from around the globe:

🇺🇸 Trading card marketplace Alt raised a $75M Series B ahead of mobile launch. Over the next few years, it plans to roll out to other asset classes to support everything from trading cards, watches, NFTs and even LP interests. As investors become more worried about public markets and inflation, alternative investments have picked up lately with Moonfare and Republic raising $100M+ rounds.

🇬🇧  Blockchain-based sustainability startup 5ire secured a $10M funding. 

🇨🇱 Chilean Fintual raised a $39M Series B led by Sequoia Capital. It offers automated passive investment strategies and is now expanding into Mexico.

Read up on all the latest fintech deals in Dealroom.co

Notable exits:

 
🇹🇭 Thailand's Leading Cryptocurrency Exchange Bitkub has been acquired by the nation's biggest bank SCB at a $1B+ valuation.

Read up on all the latest fintech exits in Dealroom.co

Tip of the week

💰 Fintech startups have raised a record $25+B in debt in 2021. In Dealroom, you can filter for investors focusing on debt and lending capital on the "Investors tab" by clicking on "Advanced Filters", "Stage"  and selecting preferred round "Debt" and "Lending Capital". Discover almost 300 venture debt providers with fintech experience.

Job opportunities

Humn.ai, TaxScouts and many other fast-growing early fintech startups with strong founders have 3000+ jobs hiring 

🥳 And Dealroom.co is hiring for 14 positions, including a Head of Research, Impact Specialist, Content Editor, and Intelligence Analyst internship.

Discover 133,000+ job openings at fintech startups (login for full results)

Dive in

🔗 Fast-growing crypto startups

🔎Past insights on fintech trends

Lorenzo Chiavarini

Innovation Analyst
Dealroom

About this newsletter

This is Dealroom's weekly fintech newsletter.  You can subscribe here to get more industry-specific intelligence on the evolving world of fintech, emerging trends, and game-changing startups. Delivered on Wednesdays.