Global investments in financial technology (fintech) companies across venture-backed and non-venture-backed firms totalled $9.4 billion in Q2 (April-June) of this year, a report has said.
The Pulse of Fintech, the quarterly global report on fintech VC trends, however, said the investment directed to VC-backed fintech startups fell by 49 per cent.
The report, published jointly by KPMG International and CB Insights, said despite this decline, VC investment in fintech is on pace to exceed 2015 results.
“Despite VC-backed funding to fintech decreasing in Q2, overall fintech funding remains on track to surpass 2015 levels,” said Ian Pollari, Global Co-Leader of Fintech, KPMG International.
Funding and deal activity to VC-backed fintech companies in the first six months of 2016 are on their way to hit $14.8 billion across over 820 deals by 2016-end at the current run rate.
Asia witnessed VC-backed fintech companies raise $0.8 billion across 46 deals in April-June 2016 – a funding decline of 71 per cent from the first quarter of this year primarily due to the lack of major mega-rounds.
The decline in fintech financing and deals is in line with what we’re seeing in the broader venture environment for startups, as VCs as well as crossover investors are pushing back harder on profitability and business model concerns, a media report quoted CB Insights CEO Anand Sanwal, as saying.
“Despite the funding drop, previously under-invested areas of fintech such as an insurance area are gaining strong momentum among venture investors across geographies,” he said.
India market continues to see action.
According to Neha Punater, Partner and Head of Fintech, KPMG in India, VC investment in fintech remains strong in India. While the total dollar value of investment has declined due to absence of mega-rounds this year, the number of deals remains consistent with 2015 levels.
“We continue to see investment in key areas such as payments and mobile wallet as well as increased momentum in emerging areas like robo advisory,” Punater said.
‘The Pulse of Fintech’ is a quarterly report created by KPMG along with KPMG Enterprise’s Global Network for Innovative Startups and CB Insights (the ‘go to’ name for insights related to venture capital investment) launched on August 17, 2016.
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