Given the significant interest in fintech globally, and its ongoing evolution in terms of market drivers, technologies and potential use-cases, KPMG is bringing you the pulse of fintech investment globally.
Each quarter, we’ll highlight key fintech deals, issues and challenges seen around the world, in addition to key trends and insights related to fintech in key regions: North America, Europe and Asia, including coverage of the Australian marketplace. Recognising the growth of the fintech sector, the report covers research of all investment classes – M&A, Private Equity (PE), as well as Venture Capital (VC) investments.
Highlights from the Q1’17 report
- After a year marked by blockbuster deals last year, 2017 has started off modestly: Global fintech investment got off to a soft start in Q1’17, with the total invested globally at US$3.2 billion, down from US$4.15 billion in Q4’16.
- VC funding remains solid: Global VC funding to fintechs held relatively steady at US$2.3 billion in Q1’17 across 203 deals – a solid result although well below peak highs. However, Europe reached a new high for VC-based funding with US$610 million invested across 67 deals.
- Corporate VC investment remains high: US$1.2 billion in deals funded during Q1'17, although participation by corporates dropped slightly to 19.3 percent globally and corporate participation in Asia-based fintech deals climbed to over 30 percent.
- Lack of mega-deals in Asia: Total fintech funding in Asia dropped in Q1’17 to US$492 million invested across 32 deals, reflecting a major drop off of investment in China in addition to a dearth of US$100m+ mega-rounds.
- Fintech transactional activity in Australia was relatively modest in Q1’17: US$21m of investment achieved in Australia in Q1’17, after a much busier period in Q4’16. This is likely due to timing but also follow-on investors looking for more tangible evidence of market traction and scalability.
- Trends to watch globally: In addition to continued growth in regtech (US$219 million across 26 deals in Q1’17) and insurtech (activity remained on par with 2016 averages at 46 deals and US$243 invested), new areas such as artificial intelligence, machine learning and Internet of Things are gaining increasing investor attention.
We examine these results and other trends in this quarter’s report. We also explore a number of questions permeating the fintech market today, including:
- Is the funding decline a reflection of global fintech investors focusing more on performance?
- How is the revised Payment Services Directive (PSD2) driving fintech activity in Europe?
- Will regtech investment continue to grow on a global basis?