The latest edition of “The Pulse of Fintech“, a quarterly report by KPMG along with KPMG Enterprise’s Global Network for Innovative Startups and CB Insights, shows that amid a tougher climate for marketplace lenders and a drop in mega-round activity, investment to VC-backed fintech startups fell 49 percent, but that despite this decline, VC investment in fintech is on pace to exceed 2015 results as more investment comes from mainstream sources, such as banks.
They say that in 2016, concerns about high valuations, the lack of significant IPO exits and macro-economic factors seem to have led investors to be more cautious. Over the first 2 quarters, VC investors focussed on more experienced companies with proven technologies or business models.
Overall global investment in fintech companies across both venture-backed and non-venture-backed companies totaled USD$9.4 billion in Q2’16, buoyed by Ant Financial’s $4.5 billion financing. Q2’16 saw VC-backed fintech companies raise $2.5 billion across 195 deals, a 12 percent drop in deal volume compared to Q1’16.
Asia experienced the most dramatic quarter-over-quarter decrease in funding to VC-backed companies – from $2.6bn in Q1 to $800m in Q2, despite a rise in the number of new fintech deals. Whilst VC investment declined, the world’s largest private technology funding round occurred during the quarter when Ant Financial raised $4.5 billion in China.
