Global Fintech Fundraising Fell in First Half of 2019, with Decline in China Offsetting Gains in the US and Europe, Accenture Analysis Finds
Value of deals falls 29% after record Ant Financial round in 2018; Fundraising soars in the US and the UK, with strong gains also in Germany, Sweden and France
HONG KONG & NEW YORK & LONDON–(BUSINESS WIRE)–Global investment in financial technology (fintech) ventures fell sharply in the first half of 2019, as fundraising and deal activity in China that had soared a year earlier ground to a halt, partially offsetting strong gains in the U.S., U.K. and several other European countries, according to Accenture (NYSE: ACN) analysis of data from CB Insights, a global venture-finance data and analytics firm.
The total value of fintech deals globally in the six months ended June 30 was US$22 billion, compared with US$31.2 billion in the same period of 2018, a decline of 29%. The drop was due mostly to the lack of a giant deal like Ant Financial’s record US$14 billion fundraising in May 2018. Discounting that transaction, global fintech investments would have climbed 28% in the first half of 2019 over the same period last year.
The value of deals in the U.S. in the first half of 2019 jumped 60%, to US$12.7 billion, even though the number of transactions was virtually unchanged from the first half of 2018 (564 vs. 563), signaling a trend of larger deals in the world’s biggest and most active fintech market. The largest portion of funding, 29%, went to lending startups, followed by those in payments, with 25% of the total. The largest deal was the US$1 billion that consumer finance fintech Figure Technologies Inc secured from a credit facility in May.
Fintech investment in the U.K. nearly doubled, to approximately US$2.6 billion, and the number of deals jumped 25%, to 263, as challenger banks and payments companies continued to draw investors’ interest. For example, Monzo raised US$144 million in June; Starling Bank raised US$211 million from two separate transactions in February; money-transfer startup TransferWise closed a US$292 million deal in May; and WorldRemit raised US$175 million in June.
“There’s been a lot of interest and demand from consumers for new fintech propositions, particularly in the U.K. and elsewhere in Europe, which helps explain the big jump in investments there,” said Julian Skan, a senior managing director in Accenture’s Financial Services practice. “Fundraising is also moving to support the scaling up of challenger and collaborative fintech, which will cause lumpiness in some rounds as we get to the business end of the investment cycle where investors look for returns based on a sustainable bottom line, rather than another buyer. However, the question is: How long can that last? Fundraising is likely to reach a plateau soon and will most likely dip going forward.”
Other European markets also made big strides, with investments in German fintechs more than doubling in the first half of 2019, to US$829 million from US$406 million in the same period last year, led by the US$300 million that challenger bank N26 raised in January and the US$125 million investment in insurtech Wefox Group in March. Fundraising in Sweden more than quadrupled, to US$573 million, while fintechs in France raised US$423 million in the first half of 2019, 48% more than a year earlier.
There were also large fundraising gains in Asia Pacific, with the value of deals in Singapore nearly quadrupling, to US$453 million, and the value of deals in Australia more than tripling, to US$401 million.
Investments into payments startups and those in lending took the bulk of global fintech fundraising, accounting for 28% and 25% of the total, respectively, while insurtechs raked in 14%.
The number of fintech deals globally rose about 2% from the first half of 2018, to 1,561, but activity was mixed in the world’s largest markets. While the number of deals was flat in the U.S. and rose sharply in the U.K., China and India experienced volume declines of 49% and 21%, respectively. But these were offset by higher volume elsewhere, including other parts of Asia — with Singapore and Japan seeing the number of deals increasing 55% and 33%, respectively — and in Europe, with the number of deals doubling in Sweden, to 40, and rising 27% in Germany, to 56.
“Increased activity in many markets is a good indicator of the level of confidence many investors have in the fintech industry,” said Piyush Singh, a managing director at Accenture who leads its Financial Services practice in Asia-Pacific and Africa. “Startups and the solutions they offer are maturing, which bodes well for traditional institutions partnering with fintechs and for innovation in the financial services industry as a whole.”
Accenture analyzed fintech investment data from CB Insights, a global venture-finance data and analytics firm. The analysis included global financing activity from venture-capital and private-equity firms, corporations and corporate venture-capital divisions, hedge funds, accelerators, and government-backed funds. The investment data ranged from 2010 through the first half of 2019 and included equity and non-equity financing. Fintech companies are defined as those that offer technologies for banking and corporate finance, capital markets, financial data analytics, insurance, payments and personal financial management.
Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions — underpinned by the world’s largest delivery network — Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With 482,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.
+852 9509 3236
Natalie de Freitas
+1 267 216 1815
This article published with permission from Business Wire