VC-backed fintech funding roars back in Q1 2016: KPMG and CB Insights

• Latest quarterly fintech (VC) report highlights rebound in funding and deals
• China shows its allure, but Singapore an up-and-coming fintech hub

 
AFTER a significant pullback in funding in the fourth quarter (Q4) of 2015, mega-rounds lifted quarterly investment into VC-backed fintech companies globally by over 150%, according to the Pulse of Fintech, the quarterly global report on fintech VC (venture capital) 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 Q1 2016, with US$4.9 billion specifically invested in VC-backed fintech companies across 218 deals, a 96% jump compared with the same quarter last year, KPMG International said in a statement.
 
The rise in funding was tempered by the fact that three mega-rounds accounted for 54% of VC fintech investment in Q1 2016.
 
On a quarter-over-quarter basis, VC-backed fintech deal activity rose 22% in Q1 2016, the company 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,” said KPMG International fintech global co-leader Warren Mead.
 
“Investors are putting money into fintech companies all over the world – from the traditional strongholds of China, the United Kingdom and the United States – to up and coming fintech hubs like Singapore, Australia and Ireland,” he added.
 

 

Lyon Poh, Digital + Innovation, head of KPMG in Singapore, said: “In Singapore, we have seen a flurry of activities in line with the Government’s push for financial institutions to adopt innovative technology.
 
“For example, many insurers are building innovation centres and programmes to rapidly identify and adopt fintech solutions to bring innovation back into their core businesses.
 
“This has in turn encouraged more fintech startups to come to Singapore and use it as a base for developing their propositions, and for fund raising,” he added.
 
Key highlights:
 

• Q1 2016 saw a big rebound in funding to the fintech sector, with total investment in fintech companies hitting US$5.7 billion. Globally, VC-backed fintech companies drew US$4.9 billion in funding, rising from just US$1.9 billion 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, which saw 13 US$50-million+ rounds to VC-backed fintech companies, a slight rise from the 10 US$50-million+ 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$2.6 billion in Q1 2016 from just US$500 million in Q4 2015. This dramatic rise came on the back of the US$1-billion+ mega-rounds to JD Finance and Lu.Com in China.

“Fintech startups continue to attract large investment both in the United States and abroad, and investors gravitate to areas yet untouched by much tech innovation including insurance,” said CB Insights chief executive officer Anand Sanwal.
 
“Yet recent events and public market performance suggest that growth-stage fintech fundraising will be harder to come by moving forward in 2016,” he added.
 
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