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Fintech private equity investment across Europe reaches $4.7 billion
Europe remains a key driver in the financial services segment. Fintech private equity investment was robust over 2017 in the region, totalling around $4.7 billion according to a new report. The quarterly ‘Fintech Pulse’ published by KPMG covers both global trends, as well as regional specific details and is based on figures from PitchBook, a company that delivers data, research and technology covering the private capital markets, including venture capital, private equity and M&A transactions.
According to the report, the US accounted for almost two-thirds of global fintech investment in Q4’17, with $5.8 billion in funding raised, and almost half of the full-year 2017 global total, with US$15.2 billion raised for the year. M&A accounted for the majority of this funding, with US$8.7 billion in deals in 2017. US Private Equity funding in Q4’17 achieved its second highest quarter ever at US$3.4 billion.
Fintech investment in Europe reached over US$2 billion in Q4’17, with VC investment achieving a new record of US$960 million – while M&A activity increased with 120 deals valued at $4.4 billion. Total investment for 2017 reached US$7.44 billion. Despite ongoing economic uncertainty related to Brexit, the UK continued to see resilience in its fintech market - accounting for US$1.6B of Europe's total investment.
In Asia, fintech investment moderated to US$748 million for Q4’17, to reach only US$3.85 billion for all of 2017, after more than US$10 billion in funding in 2016. In Asia, fintech funding was US$3.85 billion in 2017 – a massive drop-off from the more than US$10 billion invested in 2016. Decreased fintech investment in China accounted for much of the decrease in investment in Asia. China saw just US$45.8 million in investment in Q4’17, while total investment in 2017 was US$1.33 billion. On the positive side, corporate participation in fintech deals skyrocketed in Asia during Q4’17, rising from a twelve-quarter low of 11 percent in Q3’17 to reach a new high of over 31 percent.
"The fintech sector has matured considerably over the past five years and we are now seeing investors shift their focus from experimentation and smaller investments to proven and sustainable fintech business models. This has created a market characterized by larger average deal sizes, with growth likely to continue for the foreseeable future on a more sustainable trajectory.” Ian Pollari (pictured), Global Co-Leader of Fintech, KPMG International said.
Among fintech sub-sectors, both insurtech and blockchain saw record levels of VC investment and deal volume in 2017, with insurtech accounting for US$2.1B across 247 deals and blockchain generating $512M of investment across 92 deals.
Key 2017 annual highlights
Total global fintech investment was US$31 billion, the same level of investment as 2016.
The number of PE deals reached a record high of 139 in 2017, providing US$17 billion in investment.
2017 saw the third-highest annual total for VC fintech investment of the decade.
The median deal size for angel/seed-stage deals was up to US$1.5 million, compared to US$1 million in 2016, while the median deal size for early-stage rounds was also up to US$5.5 million from US$5.1 million in 2016. The median deal size of late-stage deals decreased year-over-year, from US$19.1 million to US$16 million.
Corporate participation in VC deals reached a record high of 19 percent in 2017, although corporate VC investment globally was down significantly year over year, with just US$5.4 billion invested in 2017 compared to US$9.6 billion invested in 2016.
Top 10 European Fintech Deals Q4'17
1. Trayport — $726.5M, London, UK
2. TransferWise — $280M, London, UK
3. TradeTech Alpha — $150M, London, UK
4. JustGiving — $127M, London, UK
5. BIMA — $107M, Stockholm, Sweden
6. Monzo — $93.8M, London, UK
7. Tinubu Square — $62.3M, Issy-les-Moulineax, France
8. Salary Finance — $52.8M, London, UK
9. iZettle — $47M, Stockholm, Sweden
10. WorldRemit — $40M, London, UK