Venture-backed FinTech start-ups strengthen in 2015, despite Q4 decline

Venture-backed FinTech start-ups strengthen in 2015

(Dublin, March 15 2016) 2015 marked a banner year for the global FinTech sector with US$13.8 billion invested into VC-backed FinTech companies, a 106 percent jump compared to 2014, according to a new report by KPMG and CB Insights. The growing strength of the sector is highlighted by newly minted Unicorns and increased involvement by financial services giants, despite some cooling off of activity in Q4 2015.

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The Pulse of Fintech 2015 in review

The report finds that global investment in FinTech companies totalled US$19.1 billion in 2015, with US$13.8 billion invested into VC-backed FinTech companies, a 106 percent jump compared to 2014. The record levels were achieved despite a 64 percent sequential drop off in funding in Q4, with US$1.7 billion invested across 154 deals to VC-backed FinTech companies globally, the lowest quarterly FinTech funding total since Q3 2014.

Commenting on the report, Anna Scally, Partner and Head of Technology, Media and Telecommunications and FinTech Leader at KPMG in Ireland said: “Based on data published by the IVCA, it is estimated that Irish FinTechs have raised at least €75 million through venture capital funding in 2015. The figure highlights Ireland’s credibility in the sector and the fact that investors clearly see the potential for future growth.

“The findings also reflect greater cooperation in the FinTech sector at all levels and a rapid build-up of FinTech ecosystems, both locally and across Europe. By way of a local example, the FinTech and Payments Association of Ireland (FPAI) was founded in September and is already making tremendous progress bringing together FinTechs, financial institutions, policy makers and government to collaboratively drive solutions and promote growth.”

“2015 was a tremendous year for FinTech investment around the globe. The evolving needs of digitally savvy consumers and the drive for efficiency, not least to meet regulatory and compliance costs, is propelling innovation in financial services like never before -- and investors are taking notice,”  added Warren Mead, Global Co-Leader, KPMG FinTech practice.

Key findings

  • 2015 marked a record high in the FinTech sector, with total investment in FinTech companies exceeding US$19 billion as VC-backed FinTech companies globally drew US$13.8 billion, more than doubling 2014’s funding total. There was over six times as much funding deployed to VC-backed FinTech companies in 2015 compared to 2011’s total. 
  • Q4 funding activity saw a steep decline as globally VC-backed FinTech companies saw just US$1.7 billion deployed across 154 deals, a 64 percent funding drop from the quarter prior. 
  • There are 19 FinTech Unicorn companies globally. 14 of them provide technologies and services falling into either payments or lending.
    Larger deals across the FinTech sector spiked in 2015. 2015 saw over 60 deals totalling US$50M or more to VC-backed FinTech companies globally. There were fewer than 15 such deals globally between 2011 and 2013. 
  • Funding to VC-backed FinTech companies in Europe rose from US$1.1 billion in 2014 to US$1.5 billion in 2015, as deal activity rose 30% on a year-over-year basis.
  • Funding to VC-backed blockchain and bitcoin start-ups which jumped 59 percent to US$474 million. However, deals in the space fell 5 percent as seed deal share fell to 53 percent from 65 percent in 2014. 
  • In each of the past three quarters, corporate VC participation in FinTech deal activity reached 25 percent. Asia saw the most corporate involvement, rising as high as 47 percent in Q3’15. Europe, in contrast, saw the lowest, as corporate participation fell below 15 percent in four of the past five quarters.

“Corporate investment and support from across the financial services and technology sectors is key to the future growth of FinTech. Irish tech companies and financial institutions are already working closely together to design new products and services. Financial institutions need the insight and skills that many Irish tech companies have and the relationship between the two can be mutually beneficial,”  concluded Anna Scally.

FPAI will host its inaugural conference ‘The FinTech Nation’ showcasing the Irish FinTech and Payments Industry on Thursday April 14th 2016 at the Marker Hotel, Grand Canal Square, Dublin. Further details here.

ENDS

For more information, contact:
Paul Gray
Communications Manager, KPMG Ireland
paul.gray@kpmg.ie; (01)700 4728

Notes for Editors

About KPMG in Ireland

KPMG in Ireland employs 2,200 people across its audit, tax and advisory services from offices in Dublin, Belfast, Cork and Galway. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services.

About KPMG International

KPMG is a global network of professional services firms providing Audit, Tax, and Advisory services. We operate in 155 countries 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.
 

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