Embedded finance firms raise venture capital and private equity funding to build new products in 2023

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With the adoption of embedded finance solutions continuing to grow worldwide, it is expected to become the norm in the financial services market over the next few years. This will entirely transform how consumers interact with financial services globally.

To compete in the fast-growing segment and build innovative products that transform consumer experience, early-stage embedded finance startups are raising funds from venture capital and private equity firms in 2023. This trend is visible across the world. From Asia Pacific to Europe and North America, more and more firms are seeking growth capital in the embedded finance space.

• Niro, an embedded finance startup from India, announced that the firm had raised US$11 million as part of its Series A funding round, which was a mix of equity and debt, in March 2023. Of the US$11 million, US$8.5 million came through equity funding, while the remaining US$2.5 million was secured through debt funding from Innoven Capital. Rebright Partners, GMO Venture Partners, and Elevar Equity were among the firms that participated in the equity round.

The firm is planning to use the capital for supporting its growth initiatives and expanding its current product offerings, which include an embedded lending solution. In addition to this, the firm also plans to deploy capital for shoring up its tech vertical.

The March 2023 round comes after the firm raised US$3.5 million in a seed funding round in 2021, which was led by Elevar Capital. Since the seed round, the firm had recorded strong growth owing to the soaring demand for credit among internet users and online shoppers. The firm had scaled its business to over 200 cities in India and had disbursed more than INR 3 billion, since the seed round. Over the next 12 months, the firm is eyeing a three times growth on all business metrics.

Even amid the funding winter, venture capital and private equity players have continued to invest in early-stage startups. In Europe, Monite also announced that the firm had raised US$5 million as part of its seed funding round.

• The embedded finance workflows startup based in Berlin raised capital from investors including Third Prime, S16, Audeo Ventures, and Long Run Capital. The March 2023 investment round follows the US$5 million round in early 2022, which was led by Point72 Ventures.

Like Niro, Monite is also planning to utilize the capital for developing new product features and adding payment and financial integrations. Furthermore, Monite is also seeking to expand its reach in the B2B payments sector. As of March 2023, the firm has 10 clients in the United States and Europe and is expecting to close more deals over the next few months in these markets.

In North America, banking as a service startup Synctera announced that the firm had raised US$15 million in March 2023. The capital round was led by NAventures, the subsidiary of the National Bank of Canada. Since its inception, the firm had raised a total of US$60 million, which also includes the US$33 million raised in June 2021 as part of its Series A round. The March 2023 funding round is part of the firm’s strategy to expand its presence in Canada.

As part of the funding deal, Synctera will work with the National Bank of Canada to help firms launch their fintech apps and embedded banking products in the North American market. Before the deal, Synctera had been operational only in the United States. However, with the growing embedded finance market and the demand for Canadian fintech firms to use its services, the firm had decided to expand its presence in the region.

As of March 2023, Synctera is known to be working with 50 fintech firms. However, it is slated to close more deals over the next few months in the United States and Canada, thereby supporting its growth. Going forward, PayNXT360 expects Synctera to further expand its geographical presence outside of the North American region. The demand for banking-as-a-service products has been on the surge and therefore, presents considerable headroom for growth in the global market for Synctera.

With the embedded finance ecosystem growing at a rapid rate worldwide and startups continuing to emerge with their innovative product offerings, PayNXT360 expects more venture capital and private equity money to flow into the global market from the short to medium-term perspective. This will keep driving innovation and a competitive landscape in the global embedded finance market over the next five years.

To know more and gain a deeper understanding of the global embedded finance market, click here.