The Pulse of Fintech, Q2’16

The Pulse of Fintech, Q2’16

Quarterly analysis of global venture capital trends in the fintech sector.

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Fintech2016

The Q1 report saw a big rebound in quarterly funding to the fintech sector, with total investment in fintech companies hitting US$5.7 billion. Globally, VC-backed fintech companies drew $4.9 billion in funding, rising from just $1.9 billion in Q4’15. Larger deals also spurred fintech funding growth in Q1’16. Q1’16 saw 13 $50 million+ rounds to VC-backed fintech companies, a slight rise from the 10 $50 million+ rounds in Q4’15.

This quarter, we examine key global trends along with what’s happening in fintech within key regions, as well as an investigation into robo advisory – a key area of fintech that has been gaining momentum in recent months.

We also examine the following questions:

  • What areas of fintech are gaining momentum around the world?
  • How is the definition of fintech continuing to evolve?
  • What are the recent developments around regulatory frameworks?
  • What is driving VC investment in InsurTech?

Highlights from the Q2’16 report

Overall global investment in fintech companies across both venture-backed and non-venture-backed companies totaled US$9.4 billion in Q2’16, buoyed by Ant Financial’s US$4.5B financing. Investment directed to VC-backed fintech startups fell 49%, however, despite this decline, VC investment in fintech is on pace to exceed 2015 results.

The report also addresses the following trends:

  • Q2’16 saw mega-round activity fall to a 5-quarter low. Europe had no VC-backed US$50M+ fintech funding rounds, while North America saw US$50M+ fintech funding rounds fall to 5 rounds from 13 in the same quarter last year.
  • Despite a large funding drop in Q2’16, funding and deal activity to VC-backed fintech companies in the first 6 months of 2016 are on pace to hit US$14.8B across more than 820 deals by the end of 2016, both of which would register as record highs.
  • The 30 largest fintech funding rounds during the first half of 2016 totaled over US$4.6B in aggregate funding. North America accounted for 19 of these rounds, while Asia accounted for 8.
  • Corporate investors participated in nearly 1/3rd of deals to VC-backed fintech companies in Q2’16, compared to just 23% in Q2’15.
  • Asia saw VC-backed fintech companies raise US$0.8B across 46 deals in Q2’16 – a funding decline of 71% from Q1’16 primarily due to the lack of major mega-rounds.
  • North American VC-backed startups raised US$1.3B across 97 deals, a drop of 25% in the number of deals compared to Q1’16.
  • As the UK continues to deal with the ramifications of Brexit, Q2’16 saw Germany outpace the UK for VC-backed fintech funding by 80%. European VC-backed fintech funding hit US$369M across 43 deals.
  • InsurTech is coming into its own as an area of fintech for VC investment, hitting US$1B across 47 deals in the first half of 2016. Health insurance-related startups claimed the 3 largest deals of 2016.

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