How Did Greater Boston’s Fintech Startups Do When it Came to Fundraising in 2023?

There are now nearly 200 active fintech (insurtech, regtech, etc.) startups in the Greater Boston ecosystem, the geography of which runs in my view approximately from Portland in the north to Providence in the south, and west to the Connecticut River. This is up a score from last year’s tally and is evidence that fintech in Boston is very much alive. Startup formation here remains vibrant.

Boston Skyline
Photo credit: Robmyskis1

But funding for area fintech startups declined in 2023, and that does not feel like a surprise. By my count, 42 local fintech firms raised a total of $566 million last year, down from more than $814 million in 2022. The number of startups finding funding is on par with last year, but the dollar amount is also significantly less than was raised in 2021, 2020, or 2019.

The largest amount raised by a local firm in ‘23 was the $175 million Series E announced at the very end of the year by Devoted Health, an insurtech focused on Medicare Advantage plans. The next largest round was $100 million raised by Openly, which uses artificial intelligence to generate insurance quotes for homeowners. The next largest round, $45 million, went to LendBuzz, which helps people with thin credit histories get auto loans. LendBuzz has reportedly hired investment banks for a possible 2024 IPO. Assured Allies is in fourth place, banking a $42.5 million Series B.

It seems like more startups declined to disclose their sources of capital during 2023. But most were forthcoming. More than 50 different venture firms backed Greater Boston fintech startups last year although I don’t believe any of them backed more than one local firm. Very few of these investors are based in Boston.

There were no Greater Boston fintech IPOs in ‘23, but in a new phenomenon, two previously public firms were taken private, thanks in both cases to Vista Equity Partners. In January, Vista agreed to acquire Duck Creek Technologies for $2.6 billion in an all-cash transaction. Duck Creek had gone public in 2020 and was once worth ~$7 billion as a public company. Nine months later, in October, Vista took EngageSmart private for $4 billion.

Here are the 2023 angel, venture, and private equity funding rounds I tallied (including one for which the dollar amount was not disclosed). I do not include debt financing.

Tracking when companies shut down is harder than tracking when they raise capital because most of them do so quietly. But those that exit via M&A leave more traces. The largest exit by acquisition came in November when Corvus was acquired by Travelers for ~$435 million. Earlier in the year, Volly was purchased by MyHome, Finch by Australian company Finder, Centage by Scaleworks, and BlueLeaf by FusionIQ.
What is fintech? Tracking Greater Boston’s fintech startups raises existential questions. It’s easy to joke that every company is a fintech company because embedded finance blurs the boundaries. In addition, we’re seeing a lot of innovation at the intersection of fintech and other industries, particularly healthcare. 
What does it mean to be located in Greater Boston? COVID accelerated a trend toward distributed workplaces, so determining where a startup is headquartered is increasingly a judgement call. I exclude subsidiaries of fintechs with headquarters elsewhere. But if a CEO lives in Boston, or key members of the team reside here, I will tend to include them.

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, and speculation. I no longer look at Twitter for evidence of funding or even that a startup remains alive as this once wonderful platform continues its slow slides into irrelevance.
Please be in touch if you are aware of any startups, funding events, exits, or closures I have missed.
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