Global Fintech Fundraising Fell in First Half of 2019, with Decline in China Offsetting Gains in the US and Europe, Accenture Analysis Finds
Global investment in financial technology (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 U.S., U.K. and several other European countries, according to Accenture (NYSE: ACN) analysis of data from CB Insights, a global venture-finance data and analytics firm.
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Global half year performance comparison (Graphic: Business Wire)
The total value of fintech deals globally in the six months ended June 30 was US$22 billion, compared with US$31.2 billion in the same period of 2018, a decline of 29%. The drop was due mostly to the lack of a giant deal like Ant Financial’s record US$14 billion fundraising in May 2018. Discounting that transaction, global fintech investments would have climbed 28% in the first half of 2019 over the same period last year.
The value of deals in the U.S. in the first half of 2019 jumped 60%, to US$12.7 billion, even though the number of transactions was virtually unchanged from the first half of 2018 (564 vs. 563), signaling a trend of larger deals in the world’s biggest and most active fintech market. The largest portion of funding, 29%, went to lending startups, followed by those in payments, with 25% of the total. The largest deal was the US$1 billion that consumer finance fintech Figure Technologies Inc secured from a credit facility in May.
Fintech investment in the U.K. nearly doubled, to approximately US$2.6 billion, and the number of deals jumped 25%, to 263, as challenger banks and payments companies continued to draw investors’ interest. For example, Monzo raised US$144 million in June; Starling Bank raised US$211 million from two separate transactions in February; money-transfer startup TransferWise closed a US$292 million deal in May; and WorldRemit raised US$175 million in June.
“There’s been a lot of interest and demand from consumers for new fintech propositions, particularly in the U.K. 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. However, the question is: How long can that last? Fundraising is likely to reach a plateau soon and will most likely dip going forward.”