Fintech funding tops $8.3b in Q2 but Asia deals hit near-record low

Illuminated commercial buildings are seen from the observation deck of the Oriental Pearl Tower at night in the Lujiazui Financial District in Shanghai, China, on Friday, Oct. 13, 2017. Photographer: Qilai Shen/Bloomberg via Getty Images

Financial technology (fintech) funding in the second quarter of this year topped $8.3 billion globally but deals and funding in Asia hit near-record low and are on track to fall below 2018 total, according to the latest report released by CB Insights.

Funding in the second quarter got a boost from 25 deals that were $100 million plus rounds worth approximately $5 billion in funding but every continent saw deals dip during the period, the report showed.

For the entire first half of this year, global fintech saw 838 deals worth $15.1 billion, compared to the 1,895 deals worth $40.5 billion for the entire 2018.

In the April-June quarter, Asia saw 82 venture capital-backed deals worth $1.1 billion, both close to historical lows. For the entire 2018, Asia saw 567 deals worth $22.8 billion.

“Asia fintech deals and funding will fall short of 2018’s record as a result of a pullback in China,” the report by the market intelligence platform said.

North America saw deals drop 21 per cent on a quarterly basis. However, funding to North American fintech surged on the back of 15 mega-rounds in Q2’19 that also minted three of the four new US-based fintech unicorns.

CB Insights said India took the lead as the top market in Asia for fintech deals for the first time ever in Q2 while China saw deals dropped to a new five-quarter low of 15 deals, down 81 per cent from the same period last year.

In terms of funding, China reclaimed the top position, edging ahead of India with $375 million of fintech funding in the quarter despite a drop-off in deals. India saw funding top $350 million.

Latin America, however, topped both China and India for fintech funding during the quarter, with 23 deals worth $481 million.

Notably, VC-backed fintech deals dropped to their lowest total since Q4 2016 to 367 deals but funding grew 24 per cent quarter-on-quarter during the period.

The second quarter also minted seven new unicorns – Marqeta, Bill.com, Carta, Lemonade, Checkout.com, Ivalua, and Japan’s Liquid – while valuations continued to grow as many companies preferred to raise private financing over going public, CB Insights said.

Digital-first “challenger banks” make up the biggest cohort of the fastest-growing fintech startups, with funding surpassing 2018’s record year-end total to $649 million.

The most active fintech VCs from Q2 2018 to Q2 2019 were 500 Startups, A16z, Ribbit Capital, Accel, Salesforce Ventures, QED Investors, Flourish, CEFIF, Anthemis Group, Bessemer Venture Partners, and BeeNext.