Investment into venture capital (VC) backed fintech companies in China increased 67 percent in the third quarter from the previous three months, bucking the global trend which has seen two consecutive quarter declines, finds a recent KPMG report.
Over USD1 billion was invested into VC-backed fintech companies in China with 12 deals done in the third quarter, compared to USD600 million and 13 deals recorded in the second quarter. Global VC-backed fintech funding declined 17 percent to USD2.4 billion in the third quarter, while deal activities fell 12 percent to 178 deals, according to Pulse of Fintech, a quarterly global report on fintech VC trends published jointly by KPMG and CB Insights.
Investors continue to focus on payments and lending in China, although areas such as InsurTech are also starting to gain traction. The report highlights that China has embraced a shift toward using mobiles to make small transactions, with some retailers opting for online payment instead of cash. It is therefore not surprising to see an emphasis on payments and marketplace lending in the country.
Blockchain has also gained attention with growing popularity in terms of payments and lending services. Raymond Cheong, Partner, KPMG China, says: “Blockchain is becoming very hot as banks and financial institutions examine best practices and look closely at what international companies are doing in the space. VC investors are putting a lot of money into small blockchain technology companies in Asia; some very new companies are already into their second or third round of funding.”
While deal activities in Asia declined to a five-quarter low at 35 deals in the third quarter, funding into VC-backed companies increased 50 percent from a quarter earlier to USD1.2 billion, due to a strong performance in China. Year-to-date results suggest Asia-based fintech investment for 2016 could top last year’s record high of USD4.8 billion, according to the report.
James McKeogh, Partner, KPMG China, says: “There has been a lot of conversation about setting up consortiums in Asia. We are seeing cross-industry and cross-jurisdiction organizations working together, utilizing technology and data from an infrastructure perspective in order to address some of the big gaps that exist. For example, property developers, banks and lawyers are working together to simplify the process of buying and financing property.”
- Ends -
CB Insights, backed by Pilot Growth Equity and the National Science Foundation, is a software-as-a-service company that uses data science, machine learning, and predictive analytics to help our customers predict what’s next—their next investment, the next market they should attack, the next move of their competitor, their next customer, or the next company they should acquire. The world’s leading global corporations including the likes of Cisco, Salesforce, Castrol, and Gartner as well as top tier VCs including NEA, Upfront Ventures, RRE, and FirstMark Capital rely on CB Insights to make decisions based on data, not decibels.
KPMG China operates in 16 cities across China, with around 10,000 partners and staff in Beijing, Beijing Zhongguancun, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Hangzhou, Nanjing, Qingdao, Shanghai, Shenyang, Shenzhen, Tianjin, Xiamen, Hong Kong SAR and Macau SAR. With a single management structure across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 155 countries and regions, and have 174,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG China was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, as of 1 August 2012. Additionally, the Hong Kong office can trace its origins to 1945. This early commitment to the China market, together with an unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in the Chinese member firm’s appointment by some of China’s most prestigious companies.