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Pulse of Fintech

Pulse of Fintech

Latest report from KPMG and CB Insights highlights a rebound in funding and deals in first quarter of the year.


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Pulse of FinTech

After a significant pullback in funding in Q4 2015, mega-rounds lifted global quarterly investment into VC-backed FinTech companies by over 150 per cent, according to the Pulse of FinTech - the quarterly global report on FinTech VC trends published jointly by KPMG International and CB Insights.

According to the new report, global investment in private FinTech companies totalled US$5.7 billion in the first quarter of the year, with US$4.9 billion specifically invested in VC-backed FinTech companies across 218 deals, a 96 per cent jump compared to the same quarter last year. The rise in funding was tempered by the fact that three mega-rounds accounted for 54 per cent of VC FinTech investment in Q1 2016. On a quarter-over-quarter basis, VC-backed FinTech deal activity rose 22 per cent in the first three months of the year.

Commenting on the report, Pangratios Vanezis, Principal, at KPMG in Cyprus said: “As investment in Europe has ”been trailing from the rest of the globe on Fintech, Cyprus has a unique opportunity of the right mix of talent pool and knowhow, a big banking sector, a global FX centre as well as geographical proximity to other global fintech centres to follow on the footsteps of major global centres such as Singapore and emerge as the new Fintech hub in Europe.”

Warren Mead, Global Co-Leader of FinTech, KPMG International added: “Global VC investment into the technology sector may be experiencing a bit of a pause, however FinTech, propelled by some very large mega-rounds, has proven to be an exception to the rule. However, while investors are continuing to put money into FinTech companies all over the world, recent challenges at several high profile, publicly-traded FinTech companies, may well dampen private investor enthusiasm moving into Q2.”

Key highlights from the Pulse of FinTech:

  • Q1 2016 saw a big rebound in funding to the FinTech sector, with total investment in FinTech companies hitting US$5.7B. Globally, VC-backed FinTech companies drew US$4.9B in funding, rising from just US$1.9B in the fourth quarter of 2015. 
  • VC-backed deal activity rose dramatically quarter over quarter. Q4 2015 saw FinTech deal activity fall to the lowest point since Q2 2014. This drop reversed course in a big way in the quarter of 2016 as VC-backed FinTech deals rose to a new quarterly high of 218 globally.
  • Larger deals spurred FinTech funding growth in Q1 of 2016, with 13 US$50M+ rounds to VC-backed FinTech companies, a slight rise from the 10 US$50M+ rounds in Q4 2015, but a drop from the 18 mega-rounds in Q1 2015. 
  • Asia saw funding to VC-backed FinTech companies jump to US$2.6B in Q1 2016 from just US$0.5B in Q4 2015. This dramatic rise came on the back of the US$1B+ mega-rounds to JD Finance and Lu.Com.

Europe FinTech deals rise; no spike in funding

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.

Corporates participate in over 20 per cent of deals for fifth straight quarter

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 sees funding bounce back

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.

Chinese mega-rounds propel Asia FinTech funding

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.

For more information, contact:

Paul Gray
Communications Manager, KPMG Ireland
paul.gray@kpmg.ie; (01) 700 4728

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.

About KPMG’s Global FinTech Practice

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.

About CB Insights

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.

© 2019 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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