Sequoia and a16z invest more in Fintech than in any other sector by 2022
Leading VC giants Sequoia & a16z made more investments in the fintech space in 2022, more than any other sector.
Sequoia Capital and Andreessen Horowitz (a16z) reportedly invested more in fintech than any other sector last year. Both leading venture capital firms made significant investments in fintech despite the tech downturn that characterized much of 2022. For example, Sequoia had over 100 investments in the sector, representing about a quarter of deals. Meanwhile, a16z participated in 206 fintech deals in 2022, which also represented a quarter of total investments last year. Furthermore, 60% of Andreessen’s fintech investments closed in H1 2022, while the rest closed in the second half of the year.
More about Sequoia & a16z 2022 Fintech Investments
Sequoia & a16z 2022 fintech investments both prominent VC platforms returned a total of 74 companies last year. Sequoia’s top three fintech targets were capital markets, payments and payroll and benefits, each category representing 16% of investment. Meanwhile, Andreessen’s top three targets were payments (28%), digital lending (12%) and blockchain (22%).
Three-quarters of Sequoia’s capital markets deals were follow-on investments, reflecting the company’s belief in the sector. Some deals the Menlo Park-based firm participated in included Capitolis’ $110 million Series D and Ledgy’s $22 million Series B. Sequoia also notably invested in Citadel Securities’ $1.2 billion funding round and Watershed’s $70 million Series B.
Meanwhile, 28% of a16z’s fintech investments in 2022 were in the payments sector, with SpotOn’s $300 million Series F a prime example. In addition, the Menlo Park, California-based VC firm also invested in Tally Technologies’ $80 million Series C and Jeeves’ $180 million Series C.
Sequoia Consumer & Business Payments Investments
Sequoia’s payments-related investments covered both consumer and business payments in four different markets, including buy now pay later (BNPL), online payment acceptance, expense management and peer-to-peer (P2P) payments. Notable examples of such investments include Klarna’s $800 million high funding, Telda’s $20 million seed funding, and Yokoy’s $80 million Series B. In addition, Sequoia also participated in Cococart’s $4 million seed round last February. At the time, Derek Low, co-founder and CEO of the online store facilitator, explained the need for Cococart’s services. Describing Cococart as a perfect solution to the tedium of taking orders online from local private businesses, Low said:
“Honestly, managing orders is difficult; most local businesses still accept orders on WhatsApp and manage their orders using spreadsheets. It soaks up so many hours of time, which could be better spent growing the business. We are at the forefront of a new wave of local entrepreneurs.”
Furthermore, Low added:
“We are inspired every day by stories of our merchants who started by selling food from their kitchens, but now run shops with commercial kitchens. Our mission is to transform local businesses and empower business owners to pursue their passion.”
The significant fintech investments by Sequoia and a16z in 2022 strongly demonstrate the companies’ faith in the sector. These fintech investments also suggest that although the industry may experience a downturn, the fintech outlook will eventually improve again.
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