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Friday 20 October 2017

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FinTech investment doubles in Q2

Written by Chris Lemmon
13/10/2017

Total investment in the FinTech market more than doubled on a quarter-over-quarter basis to more than $8.4 billion in the second quarter of 2017.

This is according to KPMG’s Pulse of FinTech report, which found that large increases in private equity funding and M&A funding propelled the increase, while the amount of venture capital investment held relatively steady.

The Americas dominated FinTech investment during Q2, primarily the result of the $3.6 billion buyout of Canada-based DH Corp. Excluding this outlier deal, it was clear that the US and Europe drove the vast majority of FinTech investment, with both regions seeing $2 billion in investment.

Total VC investment in European FinTech was $370 million across 62 deals, down from $712 in the first quarter. The report notes that investment is on course to surpass 2016’s figures, despite early indicators that investors appear to be more selective.

The significant opportunities in the insurance industry continue to drive startup activity and investor interest alike in the growing InsurTech subsector. The top deal of the quarter was from Swedish mobile micro-insurance firm, BIMA, which raised $55.2 million in Series C funding, while UK-based challenger insurer, Gryphon Group Holdings, attracted $229 million in PE funding.

Asia, meanwhile, saw relatively even investment quarter over quarter, held back only by a lack of mega-deals. This could change rapidly over the next few quarters as more activity is expected, particularly from large tech giants and payments companies focused on international expansion. Southeast Asia is set to become a key battleground as competition heats up in the payments space.

Ian Pollari, global co-leader of FinTech of KPMG International, commented: “In order to compete and win in the future, financial institutions will need to become far more aggressive around reducing their cost base. This will likely drive significant corporate interest in FinTechs, helping them achieve cost efficiencies through the deployment of smarter technologies within their operational and product areas.”



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