It will be hard not to reach for superlatives in discussing the fundraising success of greater Boston FinTech firms in 2018. There were at least 31 disclosed financing events resulting in more than $1.3 billion in capital raised — roughly $1 billion more than in any previous year.
I track roughly 140 active FinTech startup in Greater Boston which, by my definition, runs from Portland to Providence and as far west as Worcester. This means about 20% brought in additional capital last year.
By far the largest funding event of the year was $500 million raised by Cambridge Mobile Telematics from the Softbank Vision Fund (which has substantial backing from Saudi Arabia’s Public Investment Fund). But even if you set aside this out-sized round, Boston’s FinTech had an outstanding year: Circle, Devoted Health, Flywire, and Toast each raised rounds of at least $100 million.
Here are the financing events I’ve tallied:
|Cambridge Mobile Telematics||$500,000,000|
|Cambridge Blockchain||$ 7,000,000|
|Flipside Crypto||$ 4,500,000|
|Digital Onboarding||$ 2,450,000|
|Coin Metrics||$ 1,500,000|
|Alpha Vantage||$ 120,000|
|Grape Payments||$ 100,000|
Invoice Cloud and Billshark also raised money in 2018 but the amounts could not be determined.
2018 also saw multiple notable exits. EverQuote (EVER), which generates insurance leads, went public raising $84 million. LevelUp sold to GrubHub for $390 million and Kensho to S&P Global for $550 million. SS&C Technologies bought Eze Software from TPG Capital for $1.45 billion. Poloniex was acquired by Circle but the details of the transaction are somewhat murky. Other transactions include the acquisitions of TellusLabs, Quilt, and Maxwell Health. But the sale of Goji (which had raised more than $100 million in its lifetime) would be considered a disappointing outcome by most.
What led to such outstanding overall results? A rising tide lifts all boats and funding for FinTech has been growing worldwide. But there are several factors specific to Boston that have contributed. We’re quietly developing a payments cluster. Our home-grown venture funds — including Accomplice, F-Prime Capital, G20, Hyperplane, Pillar, Underscore, and Vestigo — are writing Seed, A, and B round checks to Boston-based entrepreneurs and, in some cases, supporting their startups through multiple later rounds. Yet another is the commitment key members of the community made several years ago to consciously build and support the FinTech ecosystem here.
One of those members is David Jegen, a partner at F-Prime who leads their early-stage tech fund. He is also a co-founder of FinTech Sandbox, the Boston-based non-profit that gives financial services and financial technology startups a head start with free access to infrastructure and data.
According to David, “It’s very exciting to be in Boston as things start to click. There are multiple factors at work. Financial services long played a significant role in the Boston economy, so there are many potential clients here for B2B firms and a great deal of domain expertise. Several of the larger firms in the area have also increased their support to the FinTech community, including Fidelity, State Street, Mass Mutual, and DCU.
“Ten years ago, there wasn’t any place for Boston’s FinTech entrepreneurs to come together to network and share ideas, but today we have large and active FinTech and InsurTech meetup groups, an annual Boston FinTech week, the MIT FinTech Conference, and many other events and gatherings, including the Founder’s Diaries series, which F-Prime organizes.”
I am certain to have missed some funding events and exits and to be unaware of some stealthy startups. My sources of data include, in order of authority: Edgar, reputable publications, CrunchBase, disreputable publications, rumor, speculation, and the Internet Research Agency. Sadly, I can no longer avail myself of Google+. Please be in touch if you are aware of any startups, funding events, exits, or closures that I may have missed.
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I forgot to mention that State Street acquired privately-held, Massachusetts-based Charles River Systems, a provider of investment data and analytics software, for $2.6 billion in January of 2018.