Fintech Investment In US And UK Slows Down
Venture capital investment in fintech companies dropped 52% year over year to $2.4 billion globally. a slowdown investment in Q3 for fintech startups, according to a CBInsights Pulse report.
The CB Insights says that the investment has slowed largely because there haven't been any inspiring billion dollar plus exits or financial rounds in the fintech category to spur investentment. In the United Kingdom and United States , there have been far $50 million plus rounds last year. With this, overall both regions did fewer fintech deals this quarter , potentially as a result of market uncertainty thanks to Brexit and the U.S. election cycle. Germany, on the other hand, is expected to outpace the U.K. for investment in this category. Asia too increased investment in fintech from $800 million last quarter to $1.2 billion this quarter.
Global banks in particular have been keen to put their money into fintech-a way of keeping an eye on promising startup competition. Among big banks, Goldman Sachs, Citigroup, and Banco Santander had the most fintech deals this quarter.
Fintech funding levels in Germany outpaced the UK in Q3 for the second consecutive quarter, with 35% more funding raised by German-based VC-backed fintech companies than those in the UK. Germany's fintech market received US$105 million versus the UK's US$78 million. Q3'16 saw both European fintech deals and funding fall quarter-on-quarter. European fintech funding fell 43% to US$233M whilst globally it fell 17% to US$2.4B over the same period. In Asia, we saw the reverse as funding increased 50% to reach US$1.2B. Notably, Europe has not registered a single US$50m+ mega-round so far in 2016 whilst Asia saw $50M+ fintech rounds stay level at 4 deals, for the fourth straight quarter.
Fintech funding is down this quarter, but it no way reflects a lack of interest among investors, particularly corporates who see fintech as a way to leapfrog ahead of the competition. In Q3'16, corporate venture capital participation in global deals to VC-backed fintech companies reached 30% for the second consecutive quarter according to Brian Hughes.
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