International fintech investments saw a sharp upward trend and set a record with US$57.9B worth of investments across 875 deals just within the first half of 2018. This was a drastic increase from the US$38.1B invested in the year 2017.
This year’s first half saw the successful closure of two gigantic deals: US$14B raised by Ant Financial in Q2’18, which was quite record-setting and second was Vantiv’s acquisition of WorldPay worth US$12.9B in Q1’18.
The volume of the deals was very robust and spiraled up from 834 in H2 in 2017 to 875 deals in H1 in 2018. In addition, worldwide median volume of late-stage venture financings shot up to US$25M during H1in 2018, which was up from the US$14M annual median size recorded in 2017. Early-stage deal size also went up; it was earlier at a median of US$5M in the year 2017 and went up to US$9.2M at the mid of this year.
“Large deals at all stages powered fintech investment in the first half of 2018,” said Ian Pollari, Global Co-Lead, KPMG Fintech. “But just as notable is the breadth of investment. We’re seeing a mix of fintech sub-sectors drawing increasing interest, including data, AI and regtech — these horizontal capabilities have appeal across the full spectrum of the financial services industry.”
“Not only is more investment flowing into emerging technologies like AI and subsectors like regtech, we are also seeing efforts to combine fintech capabilities and embed them within broader digital transformation programs,” added Anton Ruddenklau, Global Co-Lead, KPMG Fintech.
All venture capitalists were positive about the start-ups in the space of funding fintech, but M&A activity also seems to be mounting as more and more established fintechs seek exits. The M&A activity currently has matched the most active M&A periods observed till date.
The highlights of H1 2018
- International fintech investment (PE, VC and M&A) has gone up to more than double. It stood at US$22B in the H2 of 2017 and it shot up to a record high of US$57.9B in H1 of 2018, pushed by nine US$1B+ mega deals.
- The top four fintech deals of Europe were worth US$22.4B in investment and included the UK-based Vantiv’s acquisition of WorldPay, which was worth US$12.9B
- In H1 2018, the investment in fintech companies only in Asia stood at US$16.8B with 162 deals, which was a raise from 119 deals in H2 2017.
- Fintech VC size has stayed at steady levels since beginning of 2015, going up to 653 deals in H1 2018.
- Median late-stage VC deal amount in the fintech sector drastically went up from US$14M in 2017 to US$25M in H1 2018.
US-based fintechs observed rise up in VC funding, crossing US$5B in H1 2018
In H1 2018, US fintech businesses pulled in US$14.2B worth of investments, which included over US$5B in VC investment. VC deal size kept increasing and went up from 276 deals in H2 2017 to about 328 deals in H1 2018, motivated to a large extent by the resurgent angel, seed and early-stage VC deals. Investors quickly invested in start-ups in rising fintech sub-segments, which included investment banking and regtech, and continuously poured in finances in mature, late-stage businesses such as Robinhood – whose US$363M was one of the biggest VC deals in H1 2018.
Biggest four deals in Europe were worth US$22.B
Total investment into fintech businesses in Europe touched US$26B with 198 deals in H1 2018, which was pushed by significant deals by WorldPay, iZettle, Nets, and IRIS software – which alone accounted for US$22.4B of this total. Though the deal value reached a new record high in Europe, the deal volumes came down from 268 in H2 2017 to 198 in H1 this year.
The UK was at the top in fintech investments in Europe with US$16.1B having charted about half of the top 10 deals in this region, though there were concerns regarding Brexit negotiations. Scandinavia’s fintech sector also did well, with the buyouts of iZettle (Sweden), Nets (Denmark) and Nordax Group (Sweden) figuring amongst the top ten deals in H1 of 2018.
The fintech sector of Asia touched US$16.8B because of Ant Financial deal
H2 2017 saw USS$2B which propelled the total fintech investments in Asia to a figure of US$16.8B with 162 deals in H1 2018 pushed by a huge US$14B Series C VC investments by Ant Financial. If we do not count this huge deal, Asia still recorded robust fintech investments in India, Australia, and Singapore which saw a quarter-over-quarter growth in overall fintech sector funding.
Following the footsteps of the worldwide trend, the median fintech VC late-stage deal size in Asia went up drastically in H1 of 2018 – shooting up from US$25M to US$37.7M, making it the highest seen in any region. AI and blockchain remained the main priorities for fintech investors in Asia, along with insurtech and regtech.
The payments and regtech sub-sectors came to the limelight
Payments saw a number of large exits in H1 2018 and emerged as one of the most established sub-sectors of fintech. This included successful IPOs by EVO Payments and GreenSky, Vantiv’s acquisition of WorldPay in the UK and Paypal’s acquisition of iZettle which was worth US$2.2B. Even the regtech sector saw a great start in the first half of this year with US$1.37B investments which have already left the 2017 total behind.
Blockchain has gone past the experimentation stage
Blockchain has been drawing in huge attention from global investors in the first half of this year with funding coming in for experienced companies and consortia planning to get added rounds rather than going to new market entrants. Huge rounds in blockchain companies were observed in H1 2018, which included US$77M to Ledger in France, US$100M+ rounds to R3 and Circle Internet Finance in the US.
Strong stance expected for fintech investments
With a huge chunk of capital still to be deployed, the fintech centers globally growing, more and more companies want to utilize fintech so as to drive further innovations, investments in fintech are surely predicted to stay robust by H2 of 2018.
