That Was the Year That Was

It’s time once again for our first annual Greater Boston FinTech year in funding review. 2014 saw roughly $194 million invested in private financial technology companies, a substantial jump from roughly $86 million in 2013. But, for perspective, keep in mind that several individual FinTech firms in other regions, including Stripe and Square, raised rounds of as much as $150 million.

The largest single investment in 2014 – $50 million – went to global payments services provider BlueSnap and came from Great Hill and Parthenon.  Says Ralph Dangelmaier, BlueSnap CEO, “2014 was a great year for the payment space in Boston. With BlueSnap’s additional $50 million in financing, we will seek to bring on several experienced payment executives, offer new product enhancements, grow our network of acquiring banks and open new offices in more locations.”

The second largest investment – $40 million – went to Credorax, another firm in the payments space. Funding came from Columbus Nova Technology Partners and Blumberg Capital.

Rhode Island-based Swipely had the third largest raise at $20 million, which was led by the Pritzker Group. Swipely offers small businesses (mostly restaurants) marketing solutions, including analytics and customer loyalty rewards programs, based on data from the payments network, POS, and web. Says Swipely founder Angus Davis, “In 2015, Swipely will expand the business beyond $4 billion in sales under management to help many more restaurant, hospitality and retail brands understand customers and grow sales. We’ll continue to invest in sales and marketing, and launch innovative products as part of Swipely’s cloud platform that help businesses bring customers back and transform the guest experience when you eat out and pay at your favorite restaurants.”

As you can see, it was a very good fund-raising year for companies in the payments space, as they attracted 63% of the capital allocated to area FinTech companies. (I’m putting Swipely in the payments category, though their value-add is in the use of that data to make merchants better marketers.)

That percentage would be greater still if we had visibility into the funding of MCX, the Needham-based mobile payments company backed by a consortium of giant retailers hoping to reduce what they pay in interchange fees. We will mark down 2014 as an “annus mirabilis” for MCX, which saw itself painted as the bad guy trying to prohibit use of Apple Pay at member merchants, lost some customer data to a hack, and didn’t manage to launch its mobile wallet, called CurrentC, to consumers. (It’s still in beta.)

Percent of Greater Boston FinTech Funding in 2014

Most Active Investors

More than 30 investors and firms participated in investment rounds for local FinTech startups. Spark was the most active investor in the Boston area, participating in three financing events – for peerTransfer, Quantopian, and Goji (formerly Consumer United). Khosla and Great Oaks each participated in two, with Khosla leading Plastiq’s Series B. Immediately following the round Plastiq decamped for San Francisco.

Here’s a rundown of the funding events I’m aware of.

Firm                                                  Month                           $              

peerTransfer                                     January                    $  6.2MM

Goji                                                 April                         $14.0MM

Swipely                                            May                         $20.0MM

Plastiq                                             July                          $10.0MM

Signifi                                              September                $  4.9MM

Linkable Networks                               October                    $  8.0MM

Bison                                               October                     $ 1.2MM

Credorax                                          October                    $40.0MM

Quantopian                                       October                    $15.0MM

Saylent                                             October                    $ 2.0MM

BlueSnap                                          November                 $50.0MM

Kensho                                             November                $15.0MM

Financial Diligence Network                   December                $  .42MM*

Splitwise                                            December               $  1.4MM

*Debt

Things to watch for in 2015

I now count more than 80 FinTech startups in greater Boston. Several are putting the finishing touches on seed or A rounds they’ll announce in early 2015.  Others are two or more years from their most recent round and will be looking for capital, or an exit, this year. As in any ecosystem of this size, we’ll see some enter, some grow, some falter, and some close down over the course of the next year.

***

Disclaimer: The sources of this data include, in order of authority:  Edgar, reputable publications, Crunchbase, disreputable publications, rumor, speculation, innuendo, and Google+. Please report all errors, whether of omission and commission, to the author.