Fintech startup funding soared to $131.5 billion in 2021. Here's where it went.
Many are calling decentralized finance, or DeFi, the “Wild West of finance.” This fast-growing industry aims to provide automated banking services for cryptocurrencies to everyone, with no middle men. But DeFi is still in its early stages, which means there are risks. WSJ explains. Photo illustration: Tammy Lian/WSJTo those watching the funding of new financial-technology companies in 2021, the headlines were dramatic.
Funding for fintech startups soared to $131.5 billion last year from $49 billion in 2020, according to CB Insights. In 2020, investors created 27 fintech “unicorns,” or private companies with a value north of $1 billion; in 2021, the number of new unicorns reached 157. The number of exits, whether in the shape of an IPO or a merger or acquisition by a special-purpose vehicle, jumped 73%—giving early investors in those businesses fresh capital to redeploy in new fintech startups.