Investment in the financial technology (fintech) sector has rallied over the past nine months – with mega-rounds lifting quarterly injections into VC-backed firms over 150%.
According to a report by CB Insights, named Pulse of Fintech, global investment in private fintech companies totaled $5.7 billion in Q1 2016, with $4.9bn specifically invested in VC-backed fintech companies across 218 deals, a 96% jump compared with the same quarter a year ago.
However the news comes with the caveat that 54% of the investment came from three mega-deals, which may temper hopes that the sector has climbed out of a dip in funding seen in Q4 2015.
North America and China accounted for the biggest quarter-over-quarter spikes. The former raised $1.8bn across 128 deals, an increase of 80%. China’s surge, meanwhile, which represents 49% of global fintech funding, was boosted by $1bn-plus rounds for JD Finance and Lu.com.
Europe’s fintech deals reached a five-quarter high, rising from 37 in Q4 2015 to 47 in Q1 2016. The region’s funding, however, remained almost identical over the same period, at $0.3bn. Rounds for WorldRemit and LendInvest accounted for over half of Europe’s fintech funding.
“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,” said Warren Mead, global co-leader of fintech at KPMG International. “Investors are putting money into fintech companies all over the world – from the traditional strongholds of China, the US and the UK – to up and coming fintech hubs like Singapore, Australia and Ireland.”
“While fintech startups continue to attract large investment both in the US and abroad, and investors gravitate to areas yet untouched by much tech innovation including insurance, recent events and public market performance suggest that growth-stage fintech fundraising will be harder to come by moving forward in 2016,” added CB Insights CEO Anand Sanwal.