Latest report from KPMG and CB Insights highlights a rebound in funding and deals in first quarter of the year.
2015 was the year that fintech entered the mainstream. With respect to VC funding inparticular, over US$13.8 billion was deployed to a wide variety of fintech companiesglobally, more than double the value of VC investment in fintech in 2014.
One key to fintech’s growing prominence in the VC community is the diversity of interestsconsidered ‘fintech'. Almost every major process within banking and insurance is beingtargeted by fintech companies globally, either to disrupt the incumbents or, increasingly, toenable them to serve their customers better or reduce costs.
While many big banks and insurers have set up their own fintech corporate venture funds,they’ve also increasingly looked to partnership models with fintech companies to find anedge over their competitors. In effect, these banks have moved from unbundling servicesto re-bundling them – from disruption to co-creation. Part of the competitive advantagebanks have over new market entrants is trust. But to fully become the real-time, innovativeand modern trusted adviser, they have to be willing and able to plug and play with fintechcompanies to provide customers with an amazing, personalized, secure, easy andinexpensive experience to better manage their financial lives.
Unlike some other investment areas, fintech is gaining momentum in every region of theworld – with hubs developing across Asia, Europe and North America. There are manyunique factors driving interest in different regions, from diversification and sub-sectordiversification to growth in deal size and an enhanced focus on fintech as an enablerrather than a disruptor.
Europe saw VC-backed FinTech deals reach a five-quarter high, rising from 37 in Q4 2015 to 47 in Q1 2016. Europe FinTech funding remained almost level with Q4 2015’s total at US$0.3B. UK funding rounds to WorldRemit and LendInvest pushed UK funding to account for over half of Europe’s FinTech funding total.
Corporate investors continue to play a large role in the FinTech ecosystem, with global deals to VC-backed FinTech companies standing at 24 per cent + in three of the past five quarters. Of note, Europe saw an upswing in corporate FinTech investment during Q1 2016 as corporate participation in deals to VC-backed FinTech companies rose from 8 per cent in Q4 2015 to 21 per cent in Q1 2016.
North America saw both FinTech funding and deals rebound following a major drop in Q4 2015, as VC-backed FinTech companies raised US$1.8B across 128 deals, an increase of 80 per cent in funding quarter-over-quarter.
Deal activity to VC-backed FinTech companies in North America is on pace to reach a new high in 2016 at the current run rate, as the 128 FinTech deals registered over the three-month period was the largest quarterly total since Q2 2015.
Following a drop off in Q4 2015, FinTech investment in Asia reversed course in the first quarter of 2016 to hit a new high of US$2.6B.
China accounted for US$2.4B of Asia FinTech funding and 49 per cent of FinTech funding across all geographies, primarily as a result of US$1B+ funding rounds to JD Finance and Lu.com.
Communications Manager, KPMG Ireland
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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.
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KPMG’s Financial Services practice has launched the global FinTech practice in order to leverage international investment activity and capability development in FinTech across KPMG member firms. Warren Mead and Ian Pollari, partners with KPMG in the UK and KPMG in Australia respectively, have been appointed as global co-leads of the practice, along with a leadership team including partners from countries including the US, UK, Ireland, Israel, China & Hong Kong, India and Australia.
CB Insights, backed by RSTP 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.
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