Driven by a mega $1.4 billion-investment by Softbank, Asia surpassed the US to account for over half of the funding raised by venture-backed financial technology (fintech) firms in the second quarter of 2017.
Overall Asian fintech funding in Q2 stood at $2.7 billion, helped by Softbank’s $1.4 billion investment in One97, the parent of India-based payments giant Paytm, according to a CB Insights report. Paytm’s funding accounted for 40 per cent of Asia fintech funding in the first six months of 2017.
According to CB Insights, Asian deal volumes and funding in the fintech space are on pace to surpass 2016’s record at the current run rate. Compared to Q2 2016, Asia fintech funding rose 88 per cent while deals increased 22 per cent.
After a dip in Q1, VC-backed fintech funding in North America rose 54 per cent in Q2 this year. The region also recorded the most deals of all regions in the quarter.
Globally, VC-backed fintech ventures raised $5.2 billion across 251 deals in Q2 2017, with VC investments in fintech on pace to rise 19 per cent this year compared to 2016 at the current run rate.
According to CB Insights, if the rest of the year sustains H1 2017’s deal pace, global fintech deal activity could surpass 2016’s all-time high.
Globally, there are 26 fintech unicorns with an aggregate value of $83.8 billion as at Q2 2017, with five new additions in the form of Clover, Symphony, Robinhood, AvidXchange, and Tuandaiwang. Asia is host to seven of these fintech unicorns, with the US host to 15 and Europe having four.
North America saw 12 $50-million+ fintech deals worth a combined $1.29 billion being inked in Q2 2017, leading to four new unicorns. On the other hand, Asia saw five VC-backed fintech companies notch $100 million+ deals in Q2.
With a presence in over 60 countries, Silicon Valley-based 500 Startups was the most active investor in fintech globally over the last five quarters. It was also the most active investor in the Asian region followed by SBI Investment, Matrix Partners China, Sequoia Capital India and Zhen Fund.
US-based investors New Enterprise Associates, Ribbit Capital, and Index Ventures also figured among the most active VCs in global fintech over the last five quarters.
Asian VC-backed early-stage fintech companies raised $171 million across 45 deals in Q2 after witnessing falling deal volumes for three consecutive quarters. Deals rose 150 per cent, while funding rose 176 per cent on a quarterly basis in the reported quarter.
The April-June quarter also witnessed a massive 233 per cent spike on a quarterly basis in early-stage median deal size to $5 million, after a temporary dip in Q1 this year.
The spike was driven by several $10-million+ early- stage deals, including investments in Zhongan Financial Holding, IceKredit, and Jucaicat. Chinese firms dominated top ten deals by taking seven spots, while Indian fintech firms occupied the other three positions.
Within Asia, deal activity to VC-backed fintech companies in China hit a new five-quarter high with 27 investments, a rise of 93 per cent on a quarterly basis.
In India, too, both investment and deal activity to VC-backed fintech companies surged to a five-quarter high. However, without SoftBank’s investment in Paytm, Indian VC-backed fintech funding would stand at $98 million over the three-month period.