Total Singapore fintech investment tops US$3.94b, as interest in crypto and blockchain surges, says KPMG’s Pulse of Fintech H2’21
- Record 191 fintech deals drive Singapore's US$3.94 billion fintech (VC, PE, M&A) investment in 2021
- Close to twofold increase in fintech funding from US$1.04 billion in 2H 2020, up to US$2.98 billion in 2H 2021
- Crypto and blockchain funding account for nearly half of value raised by Singapore fintechs in 2021 with US$1.48 billion transacted across 82 deals — up from US$109.75 million in 2020, taking over payments as the top fintech area funded locally
8 February 2022, Singapore – Singapore’s fintech industry hit a five-year high at 191 deals transacted in 2021 according to the KPMG's Pulse of Fintech H2’21 report. This is a 37% increase compared to 2020’s deal count (139 deals) and a 91% increase from 2019’s figures (100 deals). Total transaction value in Singapore also surged by 59% year-on-year at US$3.94 billion, across venture capital (VC), private equity (PE) and merger and acquisition (M&A) deals in 2021, up from US$2.48 billion in 2020.
In total, global fintech funding across M&A, PE and VC reached US$210 billion across a record 5,684 deals in 2021, of which fintech funding in H2’21 accounted for US$101 billion — down slightly from H1’21’s US$109 billion. One significant deal involved Singapore tech group, Grab, which listed a special purpose acquisition company (SPAC) deal in the United States at US$500 million, resulting in a post-money valuation of US$39.6 billion that made it among the top four fintech investments in Asia Pacific in 2021.
Payments continued to attract the most funding among fintech subsectors, accounting for US$51.7 billion in investment globally in 2021 — up from US$29.1 billion in 2020. A continued surge in interest in areas, like ‘buy now, pay later’, embedded banking and open banking aligned solutions, has helped keep the payments space very robust. Blockchain and crypto was also a very hot sector, attracting a record US$30.2 billion in investment — up from US$5.5 billion in 2020 and more than three times the previous record of US$8.2 billion seen in 2018. Cybersecurity (US$4.85 billion) and wealthtech (US$1.62 billion) also saw record levels of investment.
Notably, transaction volumes for fintechs in Singapore jumped close to twofold year-on-year to US$2.98billion in H2’21, up from US$1.04 billion in H2’20. Total number of deals in Singapore also rose by 36% to 95 deals in H2’21, up from 70 deals in H2’20. This surge can be attributed to Singapore’s measures to boost the capital market, such as its SPAC listing framework to position the country as a choice location for fast-growing companies and unicorns to go public in.
Overall, fintech funding in the Asia Pacific region grew to US$27.5 billion in 2021 (US$17.4 billion in H2’21). VC funding also bounced back — rising from US$11.5 billion in 2020 to US$19.6 billion in 2021. India (US$7.2 billion) and South Korea (US$3 billion) both saw record high fintech investments during 2021, while investment in Australia (US$2.6 billion) remained very robust.
“2021 has been an incredibly strong year for the fintech market globally, with the number of deals soaring to record highs across the board,” said Anton Ruddenklau, Global Fintech Leader, KPMG International, who is based in Singapore. “We’re seeing an incredible amount of interest in all manner of fintech companies, with record funding in areas like blockchain and crypto, cybersecurity and wealthtech. While payments remain a significant driver of fintech activity, the sector is broadening every day.”
Fintech funding for crypto and blockchain takes top spot in Singapore; Payments drops to 2nd place here but remains the favourite globally
Singapore saw record levels of investment in crypto and blockchain with US$1.48 billion transacted across 82 deals in 2021, as compared to US$109.75 million over 26 deals in 2020. The surging investment and deal activity reflects growing recognition for the potential role of crypto and its underlying technologies in modern financial systems. Majority of the crypto and blockchain deals for Singapore in 2021 went towards software and underlying infrastructure, rather than services.
This trend is mirrored in global investments in the crypto and blockchain space, which rose dramatically from US$5.4 billion in 2020 to a record high of US$30 billion in 2021, while the number of deals rose from 627 to 1,332 over the same period. Across the Asia Pacific region, crypto and blockchain total deal value also increased from US$386.28 million in 2020 to US$3.14 billion in 2021, with the number of deals rising from 118 to 309 over the same period.
“Cryptocurrencies and blockchain are expected to remain very hot areas of investment in 2022, with more crypto firms looking to regulators to provide clear guidance on activities in order to help foster and develop the space. In Singapore, the surge in investments into crypto and blockchain have also outpaced that of payments which long held the top spot here,” said Anton. “Given how many banks are beginning to see the major limitations inherent in their legacy architecture and technologies, we are also expecting a surge in investment into banking replacements able to help them rethink core banking services.”
Meanwhile, payments remain the hottest area of global fintech investment in 2021, with US$51.7 billion in investments globally — up from US$29.1 billion in 2020. In Singapore, however, investments in the payment space at US$628.41 million have fallen behind crypto and blockchain investments in 2021. There was however a notable ninefold (946%) increase in payments-related deals locally, up from US$60 million in 2020. A continued interest in areas like ‘buy now, pay later’, embedded banking and open banking aligned solutions have all helped keep the payments space robust.
Cryptocurrencies are expected to receive continued attention from regulators in Singapore as the city-state tries to balance the benefits of financial innovation with any inherent risks associated with this space. This will include considerations on how infrastructure can be secured to protect the large amount of capital deployed in the crypto market, even as service providers aim to scale and innovate to attract more consumers into this market.
Globally, the sector has already seen numerous large deals, including the US$1 billion raise by Bahamas-based FTX, a US$767 million raise by US-based NYDIG and a US$750 million raise by Celsius Network. Both cybersecurity and wealthtech also reached record high levels of investment in 2021, with US$4.85 billion and US$1.62 billion respectively.
Cross-border M&A sees strong rebound with US$32.2b in deal value
After falling to a seven-year low of US$10.7 billion in 2020, cross-border fintech M&A deal value more than tripled year-over-year to US$36.2 billion in 2021. The number of cross-border M&A deals also reached a record high of 275 deals during the year. Both H1’21 and H2’21 saw robust activity. During H1’21, the London Stock Exchange acquired US-based Refinitiv for US$14.8 billion and US-based Nasdaq acquired Canada-based Verafin for US$2.7 billion, while in H2’21 Italy-based Nexi acquired Denmark-based Nets for US$9.2 billion and PayPal acquired Japan-based Paidy for US$2.7 billion.
VC funding in the Americas more than doubles to record US$64.5b
Total fintech investment in the Americas rose from US$83.5 billion in 2020 to US$105 billion in 2021 (US$53.7 billion in H2’21). VC funding accounted for US$64.5 billion of 2021 investment — more than double 2020’s record US$24.8 billion. The US continued to attract the largest portion of fintech investment in the Americas, accounting for US$88 million in total investment during 2021 (US$44.4 billion in H2’21). In the Americas, more broadly, total fintech investment soared in 2021, with investment rising to record highs in Canada (US$7 billion) and Brazil (US$5.2 billion).
Europe sees record-breaking VC investment even as M&A dries up
Overall fintech investment in the Europe, Middle East and Africa (EMEA) region rose to a record US$77 billion in 2021 (U$29.8 billion in H2’21). VC investment in EMEA also reached a new high of US$31.1 billion, including a US$900 million raise by Germany-based N26 and an US$800 million raise by UK-based Revolut during H2’21. Fintech investment was incredibly robust across the region, with record levels of investment in the Nordic region (US$18.5 billion), Germany (US$5.4 billion), Ireland (US$1.6 billion), Africa (US$1.8 billion), and Israel (US$900 million).
More growth on the horizon, including significant M&A
Heading into 2022, fintech investment is expected to remain very robust, with activity growing in less developed fintech markets, including Africa, Southeast Asia and Latin America. M&A activity is also expected to rise, with deal values growing as both corporates and fintechs look to grow and build scale. There is also expected to be growing interest in fintech-focused ESG solutions and banking replacements able to address the need for modernisation of core banking platforms. There will also be an increasing number of fintechs looking to brand themselves as data companies rather than simply fintechs.
Globally, the largest fintech deals of H2’21 included the US$9.2 billion acquisition of Denmark-based payments processor Nets by Italy-based Nexi, the US$3.75 billion merger of fintech cloud platform company Calypso Technology and regtech AxiomSL to form Adenza in the US, and the US$2.7 billion acquisition of Japan-based Paidy by PayPal. H2’21 also saw four VC funding rounds over US$1 billion, including a US$2 billion raise by US-based Generate, a US$1.1 billion raise by Brazil-based Nubank, a US$1.1 billion raise by US-based Chime, and a US$1 billion raise by Bahamas-based FTX.
2021 key highlights
- Global fintech investment was US$210 billion across a record 5,684 deals in 2021 — up from US$125 billion across 3,674 deals in 2020.
- Payments remained the hottest area of fintech investment in 2021, with US$51.7 billion in investment globally.
- Record levels of investment were seen in blockchain and crypto (US$30.2 billion), cybersecurity (US$4.85 billion) and wealthtech (US$1.62 billion) in 2021.
- Other fintech areas also saw robust funding in 2021, including insurtech (US$14.4 billion), regtech (US$9.9 billion).
- Cross-border fintech M&A deal value more than tripled year-over-year to US$36.2 billion. Total fintech-focused M&A deal value rose from US$76 billion in 2020 to US$83.1 billion in 2021.
- PE funding to fintechs more than doubled from its previous high — with US$12.2 billion in investment in 2021 compared to a peak of US$5.2 billion in 2018.
- VC investment in fintech globally more than doubled year-over-year — from US$46 billion in 2020 to a record US$115 billion investment in 2021. Median VC deal sizes grew significantly for all deal stages between 2020 and 2021, including Angel and Seed (US$1.4 million to US$2.2 million), Early Stage (US$4.6 million to US$7 million), and Late Stage (US$12.7 million to US$24.6 million).
- Total fintech investment in the Americas reached US$105 billion in 2021, including a record US$64.5 billion in VC funding. The US accounted for US$88 billion of total funding and US$52.7 billion in VC funding. EMEA saw US$77 billion in fintech investment in 2021, including a record US$31.1 billion in VC funding. Fintech investment in the Asia-Pacific region almost doubled — from US$14.7 billion in 2020 to US$27.5 billion in 2021.
- Corporate VC investment in fintech was incredibly robust in 2021 at US$50 billion, with both the Americas (US$29.7 billion) and EMEA (US$11.3 billion) seeing record levels of investment.
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