VC funding to global FinTechs reaches record high | KPMG | IE

VC funding to global FinTechs reaches record high

VC funding to global FinTechs reaches record high

Venture capital (VC) funding to FinTech companies reached a record $13.6 billion in 2016 compared to $12.7 billion in 2015 with 840 deals recorded, according to the latest KPMG report on global funding to FinTech companies.

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Global FinTech funding; bokeh lights

Investment in Fintech

Overall investment in FinTech companies declined to $24.7 billion in 2016, down from its peak of $46.7 billion in 2015. However, this was driven principally by a fall-off in M&A activity.

Anna Scally, Partner and FinTech lead at KPMG in Ireland said: “VC funding in global FinTechs has remained very strong and reached an all-time high globally in 2016. The Irish FinTech market also remained robust throughout 2016.

“After 2015’s record-setting $46.7 billion in overall investment in FinTech, 2016 experienced a decline in the market with a 47.2% slide in FinTech investment. However, this follows exceptional levels of M&A activity in 2014 and 2015 which were characterised by a number of significant outlier transactions.

“Two notable trends in 2016 were collaboration - with FinTechs learning to work with major banks - and the rise of China to become a FinTech powerhouse, both in investment flow and deal activity.”

2016 highlights

  • VC funding to FinTech companies reached a record $13.6 billion compared to $12.7 billion in 2015, with 840 deals recorded.
  • European VC FinTech funding rose from modestly from $1.2bn to $1.4bn in 242 deals, while there was a significant drop in the overall level of total investment in European FinTech from $10.9bn to $2.2bn.
  • In terms of overall deal numbers, including M&A activity, Europe remained relatively robust with 318 deals involving FinTech companies, but there was a significant drop in deal values.
  • Corporate VC investment in FinTechs rose for the seventh straight year, reaching 145 deals, $8.5 billion in 2016.
  • Overall total 2016 FinTech funding declined to $24.7 billion from a peek of $46.7 billion in 2015, while deal activity dropped from 1,255 to 1,076. This was driven largely from a fall-off in M&A activity and a limited number of outlier transactions which were a feature of 2014 and 2015.

 

Outlook strong for 2017

Insurtech is predicted to continue the strong growth witnessed in 2016 as the insurance industry plays catch-up with the innovations seen in the banking industry. Growing applications of innovative technologies like wearables, the Internet of Things and artificial intelligence to the insurance industry are also likely to spur further investment. There is also likely to be increasing participation of tech giants in the FinTech sector, the report adds.

Scally also adds that “On the European side, we are also likely to see FinTech’s focus on the opportunities presented by Payments Services Directive 2 (PSD2) which is expected to be a game-changer.”

For more, see The Pulse of FinTech.

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

Notes to the Editor

All figures cited are in USD; data for the report provided by PitchBook.

About KPMG in Ireland

KPMG in Ireland employs 2,500 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 FinTech

The Financial Services sector is transforming with the emergence of innovative products and solutions. This wave of innovation is primarily driven by changing customer expectations and continued regulatory and infrastructure cost pressures. KPMG member firms are passionate about this transformation, working directly with emerging FinTechs through 26 global FinTech hubs, including Ireland. KPMG professionals also bring their global FinTech insight to traditional financial institutions, helping them fully realise the potential FinTech has to grow their business, meet customer demands, and help them stay relevant and competitive.

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