11
The Changing FinTech Landscape: A Snapshot of M&A Themes and Trends
As key sources of funding, private equity and venture
capital investors provide various levels of debt and equity
financing and also engage in full take-out acquisitions of
FinTech companies. Buyout firms, in particular, are sitting
on significant dry powder that can be deployed to invest
or acquire FinTechs with strong recurring revenues and
generally positive tailwinds, particularly in payments and
financial SaaS companies. An historically low-interest
environment had enabled liquidity events and allowed
consortium deals and minority investments to continue
despite the pandemic. Indeed, the pandemic itself has
sharpened the perception of the financial services sector as
ripe for disruption, with banks burdened by legacy systems
and less adept at providing a "frictionless" digital experience
for customers.
FinTechs have also been looking to the public markets for
capital. Prominent initial public offerings (IPO) in the past
year include Affirm, Blend, Coinbase, Marqeta, Remitly,
Robinhood, and Toast.
INVESTORS
Regional banks in
the U.S. increasingly
look to "buy" whereas
smaller or community
banks generally see
partnerships with
FinTech as a way to
grow fee income.