Fintech's January Frenzy: Fashion Resale Meets Embedded Finance as VCs Pour Billions Into Sector
One-fifth of all venture capital dollars invested globally in 2021 flowed to fintech companies, and January 2022 showed no signs of that momentum slowing. The month delivered a flurry of deals spanning circular economy platforms, embedded finance for fashion retailers, and vertical-specific accounting software—signaling that fintech's evolution is moving far beyond traditional banking infrastructure.
The headline grabber was Twig, a self-described "circular economy fintech," which secured $35 million in Series A financing. The company operates what amounts to a bank account that lets users upload inventories of their possessions—primarily clothing and electronics—and instantly liquidate those items for cash. Think Cash App meets iBuying, except applied to retail goods rather than real estate. The pitch combines fintech with cryptocurrency and ESG themes in a package seemingly designed to trigger a bidding war among venture firms.
Running parallel to Twig's consumer-facing model, Responsible raised $6.6 million in seed funding from Barclays to build an embedded finance platform for fashion retailers. Rather than operating as a standalone app, Responsible functions as an e-commerce plugin that allows fashion brands to buy back used clothing from customers instantly. The approach reflects a broader trend: financial services are increasingly being atomized and rebuilt for hyper-specific use cases, distributed through non-bank channels.
For finance leaders, the pattern emerging here matters more than any single deal. These aren't neobanks trying to replace Chase or Wells Fargo with a better mobile app. They're companies building financial infrastructure for specific transactions—reselling clothes, managing therapy practices, running fashion e-commerce—that traditional banks never bothered to address. The underlying thesis is that accounting, payments, and liquidity can be redesigned from scratch for each vertical, rather than forcing every industry into the same generic banking rails.
That vertical specialization showed up elsewhere in January's deal flow. Heard, which raised $1.3 million in March 2021 but gained renewed attention in fintech circles this month, provides accounting, payroll, and tax management services specifically for private mental healthcare practices. The company combines software with human accountants to handle the unique financial needs of therapists running solo practices. It's following the same playbook as niche neobanks like Daylight and First Boulevard—pairing technology with human expertise to serve a durable customer segment—but starting with accounting rather than deposit accounts.
The strategic logic is straightforward: accounting is the operating system of any business, and if you control the books, adding payments and banking services later becomes trivial. QuickBooks understood this decades ago for small businesses broadly. The new wave is QuickBooks rebuilt for therapists, or fashion brands, or any other vertical with specific enough needs to justify custom-built infrastructure.
What remains unclear is whether these hyper-vertical approaches can scale to venture-sized returns, or whether the fintech funding frenzy of 2021 has created dozens of well-funded solutions searching for problems that don't quite justify the capital deployed. For CFOs watching the space, the question isn't whether embedded finance will reshape B2B software—that's already happening—but which verticals actually need custom financial infrastructure versus a Stripe integration and a good accountant.
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