Fintech exits through mergers and acquisitions (M&A) have reached a new all-time high this year, outpacing all of 2020 by 23% to reach 664 deals in Q3 2021 year-to-date (YTD), new data from CB Insights show.

These figures were shared in the State of Fintech Q3’21 Report, which explores global investment trends to spotlight emerging trends.

According to the report, global fintech exits reached new heights this year, driven by M&A activity. Acquisitions in the fields of digital lending and banking, in particular, led most of the activity.

In digital lending, buy now, pay later (BNPL) M&A were all the rage in 2021 as banking incumbents and payment giants work to buy into the continued growth in e-commerce. Notable deals in Q3 2021 YTD included Square’s US$26.9 billion megadeal of Australian BNPL giant Afterpay, and Zip’s purchase of competitors Twisto and Spotii.

In Q3 2021 YTD, 61 digital lending startups were acquired, up 110% in deal count since 2020.

BNPL acquisitions continued in Q4 2021 with deals including PayPal’s US$2.73 billion acquisition of Japanese BNPL platform Paidy, Goldman Sachs’s US$2.24 billion acquisition of GreenSky, and ShopBack’s purchase of Singapore BNPL platform Hoolah.

In banking, M&A deals totaled 31 in Q3 2021 YTD, jumping 121% in deal count since 2020. Deals included Avant’s acquisition of Zero Financial, Meliuz’s acquisition of AlterBank, and Orange Bank’s purchase of Anytime.

The top 10 largest fintech M&A exits in Q3 2021 totaled US$12.6 billion in valuation. These include BillDesk (US$4.7 billion), Paidy and CurrencyCloud (US$963 million).

Fintech initial public offerings (IPOs) and mergers with blank check companies also increased in Q3 2021 YTD, rising to 46 and 14 deals, respectively.

43 new fintech unicorns

43 fintech companies reached unicorn status in Q3 2021, the second-highest number of new unicorn births after the high in Q2 2021. The figure brought the total of fintech unicorns around the world to 206, or twice as many as the Q3 2020 count.

Out of the 43 freshly minted unicorns, 21 are from the US, eight are from Asia, and six are from Europe. The US continues to lead the world, with a total of 107 unicorns, followed by Asia (41) and Europe (36).

Cryptocurrency exchange FTX was the top unicorn birth in Q3 2021 by valuation. FTX completed a US$900 million Series B funding round in July 2021, bringing the startup’s valuation at US$18 billion. That amount was updated to US$1 billion in October with the participation of Singapore state investor Temasek. FTX also disclosed a US$420 million Series B-1 fundraise, increasing its valuation to US$25 billion.

Launched in early 2019, FTX is one of the world’s largest cryptocurrency exchanges, averaging US$14 billion in daily volume.

After FTX, Zepz, formerly WorldRemit, was the second largest unicorn birth in Q3 2021 by valuation. The startup raised US$292 million in a Series E funding round, achieving a valuation of US$5 billion. Zepz is a digital cross-border payment platform operating two brands, namely WorldRemit and Sendwave, with over 11 million users across 150 countries.

Fintech funding trends

Global fintech funding totaled US$31.1 billion in Q3 2021, down 16% compared to the last quarter’s record levels but recording nevertheless a 147% increase year-over-year (YoY). This brought the total amount of fintech funding in Q3 2021 YTD to US$94.7 billion, blowing past 2020’s total of US$48.4 billion by a staggering 96%.

Mega-rounds worth US$100 million and over drove most of global fintech funding in Q3 2021, accounting for 64% of quarterly funding. Large fundraising rounds in Q3 2021 included Revolut’s US$800 million Series E, Chime’s US$750 million Series G, and Kavak’s US$700 million Series E.

Wealthtech recorded significant traction, with funding reaching US$2.8 billion. The figure brought the total of funding raised in Q3 2021 YTD to US$12.7 billion, surpassing 2020’s full year total by a whopping 115%. Notable wealthtech deals the past quarter included DriveWealth’s US$450 million Series D, iCapital Network’s US$440 million and Bitpanda’s US$263 million.

Insurtech is another segment that saw traction in Q3 2021, reaching US$10 billion in funding in Q3 2021 YTD and surpassing 2020’s total of US$7.9 billion. Insurtech deals in Q3 2021 included Coalition’s US$205 million Series E, Digit Insurance’s US$200 million Series E and At-Bay’s US$185 million.