Fintech funding tops $8.9b in Q3 but Asia could hit 4-year low this year

Commercial buildings in the central business district are illuminated at dusk in Singapore. Photographer: Brent Lewin/Bloomberg

Financial technology (fintech) funding in the third quarter of this year hit a quarterly record of $8.9 billion globally, but funding in Asia is likely to fall to a four-year low, according to a report released Tuesday by CB Insights.

The July-September quarter saw 19 fintech funding rounds worth more than $100 million, raising a combined $4 billion, the report showed. This boosted the quarterly total to a record $8.9 billion, when adjusting for Ant Financial’s $14-billion investment in Q2 2018, and $24.6 billion so far for 2019.

Deals rebounded slightly during the quarter, with 456 fintech deals sealed globally, a six-per cent rise from the previous quarter. However, the report warned that deals are likely to fall short of last year’s record as a result of a continued pullback in early-stage investing.

From January to September, global fintech deals reached 1,387 with funding already surpassing 2017’s $18.8 billion total. Last year, fintech funding reached $40.6 billion from 1,967 deals.

Southeast Asia took the spotlight as the region set a new annual record with $701 million raised across 87 deals through Q3. For the entire 2018, the region saw 81 deals receiving $578.5 billion in total funding.

The top two deals in Southeast Asia since 2015 took place in 2019: a $100-million Series B to Singapore-based Deserka and a $100-million Series C to Vietnam-based MoMo.

But Southeast Asia’s performance may not be enough to buoy Asia’s fintech funding this year. According to the report, Asia funding may fall to a four-year low if the pullback in China continues or if India deals cool down.

Asia saw 152 deals worth $1.8 billion in Q3, nearly surpassing the 156 deal in the US, but year-to-date, the region raised only $4.1 billion in funding, compared to 2018’s massive 22.9 billion, which was, again, driven by Ant Financial’s $14-billion round.

China regained the lead as the top market in Asia for fintech deals. The country saw deals spike to 55 deals, up 162 per cent from the previous quarter. The surge in deals helped China regain the lead over India, which overtook China for the first time in the second quarter of this year.

The US saw 10 mega-round investments in Q3 worth $1.9 billion to bring the quarter’s total funding to $3.9 billion. Deals, however, dropped for the second consecutive quarter to 156, an 11-quarter low.

Funding in Europe topped a new high through Q3 to $5.1 billion but deal count dropped after reduced activity in the UK, according to the report.

Globally, the third quarter saw the birth of six new fintech unicorns – Hippo, Judo, Deposit Solutions, QuintoAndar, Dave, and C2FO. So far for this quarter, three more unicorns have been minted – Next Insurance, Ebanx, and Riskified, raising the total number of VC-backed fintech unicorns to 58, with a combined worth of $213.5 billion.

In terms of verticals, challenger banks have raised $1.3 billion in Q3 for a total of over $3 billion so far this year. NuBank’s $400-million Series F was the largest reported equity investment to a challenger bank and made NuBank the highest-valued challenger at $10 billion.

Real estate tech startups also raised more funding to give homebuyers new paths to ownership, resulting in a record $1.9 billion invested in 2019, beating last year’s $1.1 billion record.

Wealth tech funding also rebounded in Q3 to $761 million, with free trading and brokerages becoming the next big market for established fintech firms with big customer bases, according to the report.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.