Fintech Funding Frenzy Hits Fashion and Niche Accounting as Sector Captures One-Fifth of Global VC Dollars

The fintech sector's record-breaking 2021 fundraising momentum carried into January 2022, with venture capital continuing to flow toward increasingly specialized financial products targeting specific industries and consumer segments.

Fintech companies captured one-fifth of all venture capital dollars invested in private companies globally in 2021, according to industry data, setting the stage for what fintech analyst Alex Johnson described as a "blockbuster month" to start the new year. The trend signals a maturation of the sector beyond traditional banking and payments into niche verticals like fashion resale and professional services.

Two deals exemplify the trend toward hyper-specialized fintech applications. Twig, which describes itself as a "circular economy fintech," raised $35 million in Series A financing in January. The company operates what amounts to a bank account that allows users to upload inventories of their possessions—primarily clothing and electronics—and instantly liquidate those items for cash. The model combines elements of Cash App's peer-to-peer payments with the instant-buyback model popularized in real estate, applied instead to retail goods.

Separately, Responsible, an embedded finance platform focused on fashion, secured $6.6 million in seed funding from Barclays. The company offers similar instant-buyback services for used clothing but distributes its product through e-commerce plugins rather than a standalone app.

The fashion-focused fintech plays represent what Johnson calls "the atomization of banking"—the breakdown of traditional financial services into highly specialized products tailored to specific use cases. Rather than offering general-purpose banking, these companies are building financial infrastructure around particular transaction types or customer behaviors.

Another example of this specialization trend emerged in March 2021, though it gained renewed attention in January commentary: Heard, which raised $1.3 million to provide accounting, payroll, and tax management services specifically for mental health professionals running private practices. The company combines software with human accountants to address the unique financial needs of therapists and counselors.

What distinguishes Heard from traditional accounting software is its approach, which mirrors the playbook used by niche neobanks targeting specific demographics. However, Heard starts with accounting rather than banking—a strategic choice that reflects accounting's role as "the operating system" of small business finance, as one industry observer noted.

The convergence of these deals points to a broader shift in fintech strategy. Rather than competing head-on with established players in general-purpose banking or payments, startups are identifying durable customer segments with specific financial pain points and building integrated solutions that combine software, services, and financial products.

For CFOs and finance leaders, the trend raises questions about how embedded finance and specialized fintech tools might reshape corporate treasury, expense management, and financial operations. If consumer fintech can successfully atomize banking for niche use cases, similar specialization may be coming to B2B financial services.