Global investment in FinTech ventures fell sharply in the first half of 2019, as fundraising and deal activity in China that had soared a year earlier ground to a halt, partially offsetting strong gains in the US, UK and several other European countries.

This is according to Accenture analysis of data from CB Insights, including global financing activity from venture capital and private equity firms, corporations and corporate venture capital divisions, hedge funds, accelerators and government-backed funds.

The total value of FinTech deals globally in the six months ended 30 June was $22 billion, compared with $31.2 billion in the same period of 2018, a decline of 29 per cent. The drop was due mostly to the lack of a giant deals like Ant Financial’s record $14 billion fundraising in May 2018. Discounting that transaction, global FinTech investments would have climbed 28 per cent in the first half of 2019, over the same period last year.

Fintech investment in the UK nearly doubled to approximately $2.6 billion and the number of deals rose by a quarter to 263, as challenger banks and payments companies continued to draw investor interest. For example, Monzo raised $144 million in June; Starling Bank raised $211 million from two separate transactions in February; TransferWise closed a $292 million deal in May; and WorldRemit raised $175 million in June.

The value of deals in the US in the first half of 2019 jumped 60 per cent to $12.7 billion, even though the number of transactions was virtually unchanged from the first half of 2018 (564 verus 563), signalling a trend of larger deals in the world’s biggest and most active FinTech market. The largest portion of funding, 29 per cent, went to lending startups, followed by those in payments, with a quarter of the total. The largest deal was the $1 billion that consumer finance firm Figure Technologies secured from a credit facility in May.

“There’s been a lot of interest and demand from consumers for new FinTech propositions, particularly in the UK and elsewhere in Europe, which helps explain the big jump in investments there,” said Julian Skan, a senior managing director in Accenture’s financial services practice.

“Fundraising is also moving to support the scaling up of challenger and collaborative FinTech, which will cause lumpiness in some rounds as we get to the business end of the investment cycle where investors look for returns based on a sustainable bottom line, rather than another buyer,” he added.

Other European markets also made big strides, with investments in German FinTechs more than doubling in the first half of 2019 to $829 million, from $406 million in the same period last year, led by the $300 million that challenger bank N26 raised in January and the $125 million investment in InsurTech Wefox Group in March.

Fundraising in Sweden more than quadrupled to $573 million, while FinTechs in France raised $423 million in the first half of 2019, 48 per cent more than a year earlier.

There were also large fundraising gains in Asia Pacific, with the value of deals in Singapore nearly quadrupling to $453 million, and the value of deals in Australia more than tripling to $401 million.

Investments into payments startups and those in lending took the bulk of global FinTech fundraising, accounting for 28 per cent and 25 per cent of the total respectively, while InsurTechs raked in 14 per cent.

The number of deals globally rose about two per cent from the first half of 2018, to 1,561, but activity was mixed in the world’s largest markets.

While the number of deals was flat in the US and rose sharply in the UK, China and India experienced volume declines of 49 per cent and 21 per cent respectively. But these were offset by higher volume elsewhere, including other parts of Asia - with Singapore and Japan seeing the number of deals increasing 55 per cent and 33 per cent respectively - and in Europe, with the number of deals doubling in Sweden, to 40, and rising 27 per cent in Germany, to 56.

Piyush Singh, a managing director at Accenture who leads its financial services practice in Asia-Pacific and Africa, concluded: “Increased activity in many markets is a good indicator of the level of confidence many investors have in the industry – startups and the solutions they offer are maturing, which bodes well for traditional institutions partnering with FinTechs and for innovation in the financial services industry as a whole.”

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