Fintech funding saw a strong rebound in 2018 as global merger and acquisitions (M&A) and private equity (PE) fintech deals helped drive the sector overall, according to CB Insights – a yearly report on global fintech investment.
On a global basis, total fintech funding reached $39.57 billion in the previous year, up more than 120 percent from $20.4 billion in 2017.
A few mega-rounds buoyed global fintech funding significantly, led by an investment in Ant Financial, the payment affiliate of Chinese e-commerce giant Alibaba Group, which secured a 14 billion funding round. This figure accounted for more than 35 percent of the total fintech funding during the year.
Asian funding volumes increased overall. Fintech firms in Asia attracted $23.0 billion in VC investment in 2018, the best figure in several year although still notably lower than the peak seen in 2015.
Within Europe, Germany continued to thrive, outstripping the UK, although transaction volume remained steady. Specifically, while the number of deals dropped in Europe, but funding reached $3.53 billion.
Fintech Funding in the US Diminished
Investors are likely still put off the UK as uncertainty over the Brexit continues, while other parts of Europe may also be less attractive as more elections loom. However, CB Insights says that London continues to be seen as a true global financial centre with a vibrant tech startup sector.
US funding volumes have also diminished at all stages. Fintech VCs raised $11.9 billion over 659 deals last year, also down from its peak of $27 billion in 2015, which was spread over 615 deals.
On a positive note, the median deal size increased year-over-year for both seed rounds and early-stage VC deals. In addition, massive late-stage fintech financing contributed to keep total deal value healthy.
“Fintech investment has made a comeback this quarter – a sign of renewed investor intent – particularly in the US and Europe. Corporates are increasingly accounting for significant amounts of fintech investment – a trend that isn’t likely to let up given the need for financial institutions to digitize the customer experience, become more cost efficient, and find new sources of earnings growth,” the report states.