The torrid pace of investment into financial technology firms shows few signs of abating.
One data point: New York- and Palo Alto, California-based private equity firm Centana Growth Partners just secured commitments for a new $375 million fund, a follow-up that's 50% larger than its inaugural 2015 fund.
Centana was co-founded four years ago by Ben Cukier and Eric Byunn, private equity veterans who left FTV Capital, and Steven Swain, a former president of Global X Management. They invest in rapidly growing companies across the financial services industry, from banking to insurance and payments, putting $5 million to $30 million into each start-up.
Fintech start-ups around the world got $24.6 billion in funding through September, fueled in part by mega-rounds exceeding $100 million, according to CB Insights. That amount surpasses the $18.8 billion raised in all of 2017. The low or negative interest rate environment globally has forced investors to seek yields in alternative asset classes like private equity.
Yet Silicon Valley is in the throes of an adjustment after billions of dollars of value evaporated from SoftBank-funded companies including WeWork and Uber this year. That has put a spotlight on how ample funding has allowed companies to stay private for far longer than they previously could, away from the discipline of public market scrutiny.
"We love large and exciting markets, but we're very focused on making sure that the economics of the underlying business works," Cukier said in a phone interview.
"Where it works, we're happy to fund investments in growth, but we take a disciplined approach," he said. "We find great companies that aren't dependent on irrational exuberance and that have real value propositions to customers out there."
Centana has investments in nine portfolio companies, including financial analytics firm Sentieo and insurance platform Ease.