I was just sent a press pre-release copy of The Pulse of Fintech, the quarterly global report on fintech VC trends published jointly by KPMG International and CB Insights. The findings are quite interesting this quarter and show that, after a significant pullback in funding in Q4 2015, mega-funding rounds have lifted quarterly investment into VC-backed fintech companies by over 150% in the first quarter of 2016.
Key highlights from The Pulse of Fintech include:
- Q1 2016 saw a big rebound in funding to the fintech sector, with total investment in fintech companies hitting US $5.7bn. Globally, VC-backed fintech companies drew US $4.9bn in funding, rising from just US $1.9bn in Q4 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 Q1 2016 as VC-backed fintech deals rose to a new quarterly high of 218 globally.
- Larger deals spurred fintech funding growth in Q1 2016. Q1 2016 saw 13 $50m+ rounds to VC-backed fintech companies, a slight rise from the 10 $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$2.6bn in Q1 from just US $0.5bn in Q4. This dramatic rise came on the back of the $1bn+ mega-rounds to JD Finance and Lu.com.
North America sees funding bounce back
North America saw fintech funding and deals rebound following a major drop in Q4 2015, as VC-backed fintech companies raised US $1.8bn across 128 deals, an increase of 80% 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 Q1 2016 to hit a new high of US $2.6bn. China accounted for $2.4bn of Asia fintech funding and 49% of fintech funding across all geographies, primarily as a result of $1bn+ funding 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. European fintech funding remained almost level, with Q4 2015’s total at US $0.3bn. 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% 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%+ 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% in Q4 2015 to 21% in Q1 2016.
KPMG and CB Insights will discuss findings from the Pulse of Fintech report, investment trends and key players in fintech during a live webinar on 31 May 2016 at 11am EDT, and you can find the full report here.
– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Main photo: Number1411, Shutterstock.com