Global fintech investment reached US$ 57.9B invested across 875 deals in H1’18, a significant increase from the US$ 38.1B invested in all of 2017, according to the KPMG Pulse of Fintech report. H1’18 highlights included the successful closing of two massive deals: the record-setting US$ 14B raise by Ant Financial in Q2’18 and Vantiv’s acquisition of WorldPay for US$ 12.9B in Q1’18.
Overall deal volume was robust, rising from 834 in H2’17 to 875 deals in H1’18. Further, global median size of late-stage venture financings increased to US$ 25M during H1’18, up from the US$ 14M annual median size seen in 2017. Early stage deal size jumped as well, from a median of US$ 5M in 2017 to US$ 9.2M at the mid-point of 2018. Venture capitalists remain excited about funding fintech start-ups across a wide range of fintech subsectors, while M&A activity has easily matched the most active M&A periods seen to date.
H1’18 key highlights
- Global fintech investment (PE, VC and M&A) more than doubled – from US$ 22B in H2’17 to a new high of US$ 57.9B in H1’18, buoyed by nine megadeals of US$1B+.
- Europe’s top four fintech deals accounted for US$ 22.4B in investment, including the US$ 12.9B acquisition of WorldPay by UK-based Vantiv.
- In H1’1, investment in fintech companies in Asia hit US$ 16.8B across 162 deals, an increase from 119 deals in H2’17.
- Fintech VC volume has remained relatively steady since the start of 2015 – rising slightly to 653 deals in H1’18.
- Median late stage VC deal size within the fintech sector rose dramatically - from US$14M in 2017 to US$ 25M in H1’18.
In H1’18, US fintech companies attracted US$ 14.2B in investment, including over US$ 5B in VC investment. VC deal volume continued its upward trend, moving from 276 deals in H2’17 to 328 deals in H1’18, driven in large part by resurgent angel, seed and early stage VC deals - Robinhood was one of the largest VC deals (US$ 363M) in the first half of 2018.
Total investment in fintech companies in Europe hit US$ 26B across 198 deals in H1’18, fueled by substantial deals by WorldPay, Nets, iZettle and IRIS software – which together accounted for US$ 22.4B of the european total. The UK led the way in European fintech investment, with US$ 16.1B and five of the top ten deals in the region. Scandinavia’s growing fintech ecosystem was also well represented, with the buyouts of Nets (Denmark), iZettle (Sweden) and Nordax Group (Sweden) among the top ten deals in H1’18.
Τotal fintech funding in Asia surged to US$ 16.8B across 162 deals in H1’18 powered by a massive US$ 14B Series C VC funding round by Ant Financial. Following a global trend, median fintech VC late stage deal size in Asia increased from US$ 25M to US$ 37.7M. Blockchain and AI continued to be key priority areas for fintech investors in Asia, in addition to insurtech and regtech.
As one of the most mature sub-sectors of fintech, payments witnessed a number of large exits in H1’18, including successful IPOs by EVO Payments and GreenSky, Paypal’s US$ 2.2B acquisition of iZettle and Vantiv’s acquisition of WorldPay. The regtech sector also got off to a hot start in H1’18, with US$ 1.37B invested, already surpassing the 2017 total. Blockchain continued to draw a significant amount of attention from investors in H1’18. Large rounds in blockchain companies were seen during H1’18, including US$ 100M+ rounds to R3 and Circle Internet Finance in the US, and US$ 77M to Ledger in France.
“Large deals at all stages powered fintech investment in H1’18,” said Mr. Ian Pollari, Global Co-Lead, KPMG Fintech. “But just as notable is the breadth of investment. We are 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.”
“The significant amount of capital waiting to be deployed, leads a growing diversity of fintech hubs across the globe, as well as an increasing number of corporates to leverage fintech in order to drive innovation. Ιnvestment in fintech is expected to remain strong heading into H2’18. Fintech sectors to look out for include insurtech, regtech and payment systems”, added Mr. Pangratios Vanezis, Board Member and Fintech partner in KPMG in Cyprus.