Global fintech market sees quiet Q1 as M&A slows and VC funding holds steady
Global fintech investment got off to a soft start in Q1 2017, with the total invested globally at USD3.2 billion, down from USD4.15 billion in Q4 2016, according to the Q1 2017 edition of The Pulse of Fintech – KPMG International's quarterly report on fintech investment.
Fintech M&A dropped in Q1 17, with USD920 million in deal volume – down from USD1.8 billion in the previous quarter, and less than half of the USD4 billion in funding in Q1 2016.
Venture capital funding to fintechs held relatively steady at USD2.3 billion in Q1 2017 – a solid result although well below peak highs.
In Europe, USD100 million+ megarounds by iZettle, Atom Bank and Funding Circle helped drive investment, leading to a record quarterly high of venture capital investment in fintech at USD610 million across 67 deals. Europe's results remained behind the Americas, which saw USD1.3 billion in VC funding, of which USD1.2 billion came from the US. Asia fell to the back of the pack, with just USD406 million in venture capital funding raised. Asia's lacklustre results reflected a lack of megadeals of previous quarters in the region.
"In the US, the UK, China and other jurisdictions, fintech investors are starting to focus more on performance and return on investment than ever before – pressuring fintechs to demonstrate scalability and a clearer path to profitability," says Ian Pollari, global co-leader of fintech, KPMG International, and a partner for KPMG in Australia. "At the same time, we're seeing new fintech companies popping up in places you might not expect – like Poland and Slovakia – under-scoring fintech's global diversity."