Dive Brief:

• U.S. payments startups raised capital in more funding rounds, 87, than did their peers in any other country during the first quarter of this year. That was a record high, jumping 61% from the fourth quarter, which saw 54 funding rounds, according to research firm CB Insights’ State of Payments Q1’22 report, released April 28.
• The U.S. payments startups beat other regions when it came to funding dollars too. Total U.S. funding for the industry amounted to $3.3 billion, down 23% from the fourth quarter’s all-time high of $4.2 billion. Still, the Q1 total was up 18% year-over-year.
• U.S. early-stage funding rounds in the first quarter made up 49% of overall rounds, followed by late-stage at 21%, mid-stage at 18% and other, 11%, CB Insights also noted. Of all the U.S. first-quarter funding rounds, the percentage of mid-stage rounds contracted relative to the fourth quarter, while the percentage of early-stage rounds increased slightly.

Dive Insight:

Even the red-hot payments sector has begun to feel the chill affecting investments and valuations among private companies, with investors becoming more selective and plans for initial public offerings stalling as the macro-economic environment has shifted in 2022.

Venture capital funding globally fell 19% in the first quarter of 2022, compared to the record-breaking fourth quarter of 2021, according to a CB Insights report on broader VC funding trends. And the number of exits by venture capitalists through initial public offerings or special purpose acquisition companies tumbled 45% in the first quarter.

When it came to exit activity among U.S. payments companies in Q1, there were zero IPOs or SPACs, compared to three mergers or acquisitions, CB Insights found.

With just the first quarter of this year, U.S. payments funding has already notched more than half of 2020’s $6 billion total, the report noted. But 2020’s total was dwarfed by 2021’s record $13.6 billion.

The top U.S. deal in the first quarter went to Cross River Bank, which in March raised $620 million at a $3 billion valuation. The banking-as-a-service company counts digital payments firm Stripe, buy-now-pay-later provider Affirm and cryptocurrency exchange Coinbase among its clients. 

With its $355 million funding round in January at a $11 billion valuation, one-click checkout startup Bolt claimed the No. 2 spot.

The first quarter’s top equity deal overall in the payments sphere – the only payments deal in the billions – was London-based Checkout.com’s $1 billion funding round from January. 

For the first time, the U.S. and Europe tied for mega-round funding. Mega-rounds are those bringing in more than $100 million, per CB Insights. The U.S. and Europe each saw a total of $2.2 billion in mega-rounds in the first quarter. The U.S. had eight mega-round deals to Europe’s six. 

The U.S. maintained its healthy lead in the unicorn race with 39 unicorns, or startups that have reached a valuation over $1 billion, in Q1, easily beating Asia’s 15 and Europe’s 14.

Globally, payments deals hit a record high 261 in the first quarter, up 37% from the previous quarter, per the report. Global funding dropped 17% from the fourth quarter of 2021, to $7.7 billion, although it was still up 13% year-over-year.

Tiger Global Management was the top investor by company count in the first quarter.