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Share of VC Dollars Going to Fintech Drops
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By Yuliya Chernova, WSJ Pro
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Good day. Less than 18% of global tech venture capital dollars was invested in fintech startups last year, the lowest share for the sector in a decade, according to a new report from venture firm F-Prime.
That said, fintech startups attracted more funding in absolute dollar terms, raising $51 billion globally last year, up from $41 billion in 2024, per the F-Prime 2026 State of Fintech Report. Fintech includes startups in banking, payments, wealth management, lending, insurance, real estate and related fields.
Fintech startups were hurt by a correction in the stock market. The cumulative market cap of emerging fintech companies that are publicly traded and tracked by the F-Prime Fintech Index peaked at $1.3 trillion at the end of 2021, then bottomed out below $400 billion in October 2023. The market cap of the index stood at about $780 billion as of Sunday. VCs use public markets to forecast their portfolio companies’ future performance.
The artificial intelligence boom, meanwhile, has been slower to reach fintech and financial services so far.
Financial services is the largest industry by gross domestic product but sees one of the lowest rates of scaled AI adoption, the F-Prime report said.
David Jegen, managing partner of F-Prime's Tech Fund, said that has to do with factors such as regulations, a lower tolerance for risk and complex industry integrations.
At the same time, F-Prime and other venture investors are seeing significant potential in AI fintech applications. “Despite it lagging, it is still going to be an amazing industry for AI adoption,” Jegen said. He said that there are many workflows performed by loan officers, insurance agents and others that can be automated.
Fintech has had its ups and downs but some of the most valuable private technology companies in the world are in the category, such as Stripe, Ramp and Revolut.
“Giants have been created,” Jegen said. “And we have an opportunity to rebuild the tech stack with AI.”
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And now on to the news...
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Michael Grimes helped take Tesla public during his earlier run at investment bank Morgan Stanley. DAVID PAUL MORRIS/BLOOMBERG NEWS
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Musk’s go-to banker back in action for the SpaceX IPO. Michael Grimes, the longtime Morgan Stanley rainmaker, spent years laying the groundwork for his bank to land a role leading the IPO of Elon Musk’s SpaceX. But by the time Musk finally decided to take SpaceX public, Grimes was working in the Commerce Department. This week, Grimes put himself back in the middle of the action. Morgan Stanley said Monday he is rejoining the bank as chairman of investment banking, a promotion from his previous role as the head of global technology investment banking.
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Apollo Looks to New Markets After Strong Quarter
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Apollo Global Management expects to keep expanding its reach beyond offering traditional private-equity and credit funds to institutional investors, after tapping some of those new pools to raise a record $228 billion in fresh capital last year, including $42 billion in the fourth quarter. “We are going from serving one market—institutional [alternative-asset] portfolios—to serving six markets,” Chief Executive Marc Rowan said Monday during a call with analysts to discuss the New York firm’s quarterly results. He indicated that those pools include individual investors and their 401(k) retirement plans.
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The Defense Department Is Infatuated With This Drippy Silver Metal
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Gallium is a quirky silver metal with low enough melting temperature that it can liquefy in your hand. It has long held a spot on the periodic table of elements, but has remained under the radar despite its use in military systems, self-driving vehicles and fast chargers for laptops. And substantially all of the gallium supplied worldwide comes from China. An investor with deep pockets—the U.S. government—now aims to change that.
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The big money in today’s economy is going to capital, not labor. In 1985, IBM was America’s most valuable company, one of its most profitable, and among its largest employers, with a payroll of nearly 400,000. Today, Nvidia is nearly 20 times as valuable and five times as profitable as IBM was back then, adjusted for inflation. Yet it employs roughly a 10th as many people. That simple comparison says something profound about today’s economy: Its rewards are going disproportionately toward capital instead of labor.
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Neara, an Australian startup that makes digital models of power networks, has raised more than $60 million to accelerate its expansion. The Sydney-based company secured about 90 million Australian dollars, equivalent to about $63 million, in a Series D funding round led by TCV. Existing investors Partners Group, EQT, Square Peg Capital and Skip Capital participated.
GenLogs, a freight-intelligence company, said it has raised a $60 million Series B financing. Battery Ventures led the round, which also included IVP, Cathay Innovation and 9Yards, plus existing investors Venrock, Autotech Ventures and others. GenLogs previously raised $21 million in seed and Series A funding, the company said.
Gather AI, a Pittsburgh-based supply chain AI startup, has raised $40 million in Series B funding led by Smith Point Capital Management. The investment includes participation from Bain Capital Ventures, Tribeca Venture Partners, XRC Ventures and others. To date, the company has raised $74 million.
VillageSQL, a San Francisco-based database startup enabling permission-less innovation via extensions for MySQL users, raised $35 million in Series A funding. FirstMark Capital led the round, which included contributions from GV, Spark Capital and Homebrew.
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Amanda Askell, the resident philosopher at Anthropic, spends her days learning Claude’s reasoning patterns and talking to the AI model. PHOTO: LINDSAY ELLARY FOR WSJ MAGAZINE
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