Australian fintech investment trends
As of H1’24, investments in the Australian fintech sector continue to lag behind historical averages and trend downwards, both in deal value and deal count.
In H1’24, Australia recorded $470 million worth of investments in the fintech sector across 39 deals. This represents a decrease of 13 percent in deal value and 9 percent in deal count when compared to H2’23, confirming that market sentiment remains challenged with a number of issues weighting on investors and market participants alike.
That said, it is believed we may be close to the low point in the cycle as we saw an uptick in deal value from Q1’24 ($157 million) to Q2’24 ($313 million), albeit this was partly due to a small number of larger deals that closed during this quarter, confirming the trend which saw M&A activity being concentrated on larger, more strategic transactions. Overall, in 2024 deal activity remained challenged, and with an election year looming (both locally and overseas), investors are likely to hold off until then before making material investment decisions.
In terms of notable deals, Camms, a risk and compliance software developer, was purchased for $150 million by Riskonnect – American compliance tech company. Bridgit, a loan start-up, raised $140 million across equity and debt, while Constantinople, a tech and operations company, raised $33 million in Series A, and payments company Till Payments was acquired for $32 million by Nuvei Corporation, a Canadian fintech company. Finally, Rich Data Co. raised $25 million in series B, Avenue Bank raised $18 million in series D and Illuvium and Cube both raised $12 million in series A.
Top 5 APAC trends to watch in H2'24
- Regulators within APAC intensifying their focus on data security and privacy.
- APAC fintechs looking for new geographies in which to grow, eg Middle East, Latin America, and parts of Southeast Asia.
- Increasingly mature generative AI and AI applications tailored to the financial services sector.
- The number of mature fintechs considering IPO exits as IPO markets begin to open up in H2’24 or H1’25.
- Continued shift from empire building to empire consolidating within the most mature fintech subsectors, including payments.
Global fintech investment update
2024 got off to a challenging start for the fintech market globally, driven by ongoing concerns related to geopolitical uncertainty and high interest rates. Total global investment declined from $62.3 billion to $51.9 billion between H2’23 and H1’24 – the lowest 6 months of fintech investment since H1’20. All regions experienced a noticeable drop in fintech investment, with the EMEA region experiencing the sharpest drop – from $19.4 billion to $11.4 billion between H2’24 and H1’24.
Globally, only five $1 billion+ deals occurred in the fintech space during the first half of 2024– all buyouts. The Americas accounted for four of these deals, including Worldpay ($12.5 billion) and EngageSmart ($4 billion) in the US, and Nuvei ($6.3 billion) and Plusgrade ($1 billion) in Canada. The UK accounted for the fifth deal – the $4 billion buyout of IRIS Software group. The UK also saw the largest fintech focused VC deal of H1’24 – a $999 million raise by Abound.
While fintech investment remained suppressed, deal volume offered a hint of optimism for the fintech market; both the Americas – including the US – and the APAC region saw deal volumes increase between H2’23 and H1’24.
At a sector level, payments continued to draw the largest share of fintech funding globally, attracting $21.4 billion in H1’24. Regtech, however, was the only major fintech subsector to see investment increase in the first half of 2024 – with the $5.3 billion in investment already surpassing 2023’s total.
At a technology level, AI continued to be a very hot area of interest for investors, particularly in the US.
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