Financial technology (FinTech) companies globally raised about $39.57 billion in 1,707 deals from investors globally in 2018, 120 per cent higher than 2017.The surge in funding was due in large part to 52 mega-rounds, or investments larger than $100 million, which were worth $24.88 billion combined.
According to New York-based, CB Insights, in a report titled: ‘2019 Fintech Trends to Watch’, a $14 billion investment in Ant Financial, the payment affiliate of Chinese e-commerce giant Alibaba Group Holding Ltd., accounted for 35 per cent of total fintech funding alone in 2018.
CB Insights, a tech market intelligence platform that analyzes millions of data points on venture capital, startups, patents, partnerships, said Fintech is happening on global scale with deals outside of core markets (U.S., UK, and China) accounting for 39 per cent of deals.
It noted that Fintech deal hubs are starting to emerge globally. The count of unique fintech startups raising funding topped a yearly high of 1,463 companies, and the unique number of investors reached 2,745 boosted by an influx of corporate investors.
It explained that early-stage deals, as a percentage, fell to a five-year low, as investors concentrated bets in perceived winners; Global seed and Series A fintech deals grew five per cent on a yearly basis in 2018, but fell as a percentage of total deals to 57 per cent.
For the year under review, there were 39 VC-backed fintech unicorns worth a combined $147.37 billion. Q4’18 saw five new unicorns births (Plaid, Brex, Monzo, DevotedHealth, and Toss) and two in the first month of Q1’19. The cohort’s total valuation in 2018 was boosted by a record year for megarounds to existing unicorns, including Gusto and Robinhood, among others.
The 106 page report showed that Asia saw the biggest boost in deals, groddfdfdwing 38 per cent Year-On-Year and a record level of funding raising $22.65 billion across 516 deals. It however, noted that political and trade war tensions may have caused some of the pull back in H2’18, but 2019 could see Asia overtake the U.S.
The U.S. remained the top market for deals with 659 investments worth $11.89 billion funding, both a new annual high, while Europe saw a pull back in deals to 367 deals but funding topped $3.53 billion, a yearly record.
South America reached a turning point in the eyes of investors in 2018, despite political turmoil across the region. The region saw funding top $540million across 55 deals, both a new yearly record. It noted that in H2’18, investors started to pull back in the region as social, political, and monetary conflicts struck the region. Despite strain, Brazil-based NuBank, became South America’s first unicorn and closed out 2018 with a $90 million investment from Tencent.
For 2019, CB Insights said there will be the battle for deposits; Fintech firms will up focus on regulatory compliance; Southeast Asia will see hotbed of fintech activity; there will be unbundling the paycheck; there will be new investment platforms and asset classes; fintech will meet real estate and there will be rise of impact on fintech. While the large rounds minted new unicorns and led funding to hit a record high in 2018, CB Insights estimates these will likely delay initial public offerings.“IPO activity is likely to remain lacklustre in 2019,” the report stated.