UK loses ground on global FinTech investment
Written by Chris Lemmon
Total UK funding of FinTech firms halved between Q2 and Q3 2017 to $636 million, compared with $5 billion in the US and over $1 billion in Asia.
Germany accounted for the largest share of FinTech investment in Europe this quarter helped by the $806 million secondary buyout of ConCardis. The UK, meanwhile, accounted for seven of Europe’s largest deals, including $100 million plus rounds to Prodigy Finance and Neyber.
Globally, the US led FinTech investment in Q3 2017, with $5 billion deployed across 142 deals. Europe and Asia lagged considerably behind the US, with Europe FinTech deals accounting for $1.6 billion of investment across 73 deals, and Asia accounting for $1.2 billion across 41 deals. Canada also saw a significant level of direct FinTech investment activity, with $312 million invested.
Asia experienced a solid increase in FinTech investment in Q3 2017, with $1.2 billion raised across 41 deals. Venture Capital (VC) funding was up considerably - accounting for just over $1 billion in investment. China accounted for over half of Asia FinTech investment at $745 million. India investment dropped for the third straight quarter, with only $87.7 million in VC invested.
Corporate participation in Asia FinTech VC deals remained high at 22 per cent of overall round counts, although actual direct investment has been quite minimal in 2017 with just $840 million invested YTD in associated deal value.
Despite healthy investment activity, the volume of VC FinTech deals dropped dramatically in Q3 2017. The number of angel and seed stage FinTech deals dropped to 67 for the quarter, a low not seen since Q1 2013. The report claims that this represents the new trend of investors focusing on larger deals and higher quality companies with proven business models.
Richard Gabbertas, head of financial services regions at KPMG UK, commented: “London is the finance centre of the UK and has been for a long time so it’s only natural that it will attract a disproportionate amount of FinTech activity but, I hope to see that change in time as other centres catch-up. Edinburgh, Manchester and other regional cities are making huge strides in developing promising fintech centres, diversifying and boosting the local job market.”
Murray Raisbeck, global co-lead at KPMG FinTech, added: “The FinTech market continues to rapidly evolve with an increasing diversity of funding participation and sources, geographic spread and areas of interest. We are seeing the emergence of FinTech leaders who are looking to expand internationally to scale their platforms, as well as large technology giants moving into adjacencies to create new value for their customers. This is a trend that is expected to continue and could force incumbent financial institutions to take bolder steps in response.”