Global Fintech Investments Decline And Here’s What Dragging It Down
Global fundraising for fintech turned sluggish in the first half of this year, according to data from CB Insights analyzed by Accenture. Specifically, investments were down by 29 percent at $22 billion in the six months ended June 30 compared to $31.2 billion in the same period in 2018.
Things were not at all bad for the emerging industry with fintech deals soaring in the United States and the United Kingdom. The volume of investments was also surging in Germany, Sweden, and France.
For the first half of the year, fintech deals in the US were up by 60 percent, amounting to $12.7 billion. The volumes of deals, interestingly, were the same. The trend showed that investors were willing to invest more money in the industry, given that the U.S. remains to be the biggest market for fintech services. One notable deal this year was the $1 billion that Figure Technologies received from a credit firm in May.
In the United Kingdom, deals almost doubled amounting to $2.6 billion. The volumes of closed deals also jumped by 25 percent. Of most remarkable was Monzo which raised $144 million; Starling Bank with its $211 million; TransferWise with its $292 million; and WorldRemit with $175 million.
There were also notable jumps in the number of deals that came out in Europe. Sweden closed 40 deals while Germany had 56. There had also been higher volumes in deals in Singapore and Japan.
CB Insights noted that the decline in the global fintech ventures was due to the lack of a massive deal similarly with how China's Ant Financial closed a whopping $14 billion fundraising in May 2018. If there had been such giant deal this year, the entire global fintech industry would have jumped 28 percent.
China had almost stopped participating in the industry this year, thereby slashing investments worldwide by 49 percent.
Another factor is the decline in ventures in India which in the previous years was touted as the next hotbed for fintech. India's lack of activity had slashed investments by 21 percent.
Looking back, global fintech investments in 2017 was at $26,67 billion, according to a separate analysis from Accenture. Investments were up in 2018 at $55.33 billion. The volumes of investments also were up 18.5 percent to 3,251 coming from 342 in 2010.
In the same period, China was leading the industry with Accenture placing the fintech market in the country at about $25.5 billion. That was described in the report as "nine-fold increase" compared to elsewhere in the world.