Strong investment of US$8.7B in Q4’17 propelled global fintech funding over the US$31B mark for 2017, sustaining the high level of investment seen in 2016. This brings the total global investment in the fintech sector over the past three years to US$122B. While global fintech deal volume declined in Q4, the number of VC transactions exceeded 1,000 for the fourth consecutive year in 2017, with PE deals reaching a new high of 139. Fintech M&A also ticked up for the year with 336 transactions in 2017.

Among fintech sub-sectors, both insurtech and blockchain saw record levels of VC investment and deal volume in 2017, with insurtech accounting for US$2.1B across 247 deals and blockchain generating $512M of investment across 92 deals.

Geographically, the US saw almost two-thirds of global fintech investment in Q4’17, with $5.8B in funding raised, and almost half of the 2017 global total, with US$15.2B raised for the year. M&A accounted for the majority of this funding, with US$8.7B in deals in 2017. US PE funding in Q4’17 achieved its second highest quarter ever at US$3.4B.

Fintech investment in Europe reached over US$2B in Q4’17, with VC investment achieving a new record of US$960M – while total investment for 2017 reached US$7.44B. In Asia, fintech investment moderated to US$748M for Q4’17, to reach only US$3.85B for all of 2017, after more than US$10B in funding in 2016.

“The global fintech market has advanced considerably over the past few years,” says Ian Pollari, Global Co-Lead, KPMG Fintech. “As the sector matures, investors have shifted from experimenting with fintech to seeking out value-driven opportunities. This is particularly true for corporates who continue to invest and see fintech as a strategic play that will help accelerate their digital transformation agendas.”

Key 2017 Annual Highlights

• Total global fintech investment was US$31B, the same level of investment as 2016.
• The number of PE deals reached a record high of 139 in 2017, providing US$17B in investment.
• 2017 saw the third-highest annual total for VC fintech investment of the decade.
• The median deal size for angel/seed-stage deals was up to US$1.5M, compared to US$1M in 2016, while the median deal size for early-stage rounds was also up to US$5.5M from US$5.1M in 2016. The median deal size of late-stage deals decreased year-over-year, from US$19.1M to US$16M.
• Corporate participation in VC deals reached a record high of 19 percent in 2017, although corporate VC investment globally was down significantly year over year, with just US$5.4B invested in 2017 compared to US$9.6B invested in 2016.

Key Q4’17 Highlights

• Global fintech investment rose marginally from US$8.5B in Q3’17 to US$8.7B in Q4’17.

• Global fintech deal activity dropped to 307 deals in Q4’17, from 327 in Q3’17, with VC deals dropping from to 227 from 250. While noticeable, the decline in fintech deal activity has been far more moderate compared to declining deal activity in other technology sectors.

• Global VC funding dipped slightly from US$3.7B to US$3.2B quarter over quarter.

• Fintech exit activity achieved a new high of US$2.4B in Q4’17, highlighting the growing maturation of some fintech subsectors.

US dominates global fintech investment; Brazil starts to make waves

Fintech funding in the Americas rose slightly quarter-over-quarter, with US$5.9B invested across 168 deals. In total for 2017, the Americas saw US$19.8B invested across 711 deals.

While the US accounted for the lion’s share of fintech investment, with US$5.8B invested across 149 deals during Q4’17, Brazil had an excellent showing, with a US$50M raise by Creditas breaking into the top 10 fintech deals in the region.

Europe VC fintech investment reaches new high for third straight quarter

After a solid US$1B+ quarter in Q3’17, total fintech funding in Asia declined to US$748M across 38 deals in Q4’17. VC funding faltered considerably in the region, dropping almost 50 percent quarter over quarter to US$550M. Decreased fintech investment in China accounted for much of the decrease in investment in Asia. China saw just US$45.8M in investment in Q4’17, while total investment in 2017 was US$1.33B.

On an annual basis, total fintech funding in Asia was US$3.85 billion in 2017 – a massive drop-off from the more than US$10B invested in 2016. On the positive side, corporate participation in fintech deals skyrocketed in Asia during Q4’17, rising from a twelve-quarter low of 11 percent in Q3’17 to reach a new high of over 31 percent.

“The fintech market is continuing to expand and evolve,” says Murray Raisbeck, Global Co-Lead, KPMG Fintech. “So much is happening – from the increasing focus on insurtech and blockchain, to the ramifications of maturing companies, such as challenger banks, looking to expand and grow. With regulations changing, particularly in Europe – 2018 will likely be an exciting year.”

For more information, contact:

Konstantin Aushev
Head of IT Advisory
KPMG in Kazkahstan and Central Asia
+7 727 298 08 98
kaushev@kpmg.kz