By Adrian M. Reodique
Aug. 22, 2016
Investments to venture capital (VC)-backed fintech startups in Asia has dropped by 30 percent in second quarter of this year (Q2 2016), according to the Pulse of Fintech report by KPMG International and CB Insights.
The report analyses the latest global trends in VC investment data on the fintech sector.
According to the report, funding to VC-backed fintech companies in Asia fell from over US$2.6 billion in Q1 to US$772 million in Q2 due to lack of major mega-rounds.
Despite this, fintech deal and funding activity in the region are on pace to surpass the 2015 total deal raised. Fintech companies have already raised US$3.4 billion in the first two quarters which is currently more than half of total funds in 2015 at US$4.7 billion.
Asia has also recorded a new high number of fintech deals in this quarter with 46. Early-stage deal share remained dominant in the region which accounted for 61 percent while mid-stage deal share at Series B and C stages took the 30 percent.
Globally, the investment to VC-backed fintech startups dipped by 49 percent in Q2 while the overall investments for both VC and non-VC backed companies totaled at US$9.4 billion. The deals raised by VC-backed companies have also dropped by 12 percent with only US$2.5 billion across 195 deals in Q2.
"Despite VC-backed funding to fintech decreasing in Q2, overall fintech funding remains on track to surpass 2015 levels," said Ian Pollari, Global Co-Leader of Fintech at KPMG International, in a press release.
"Traditional financial institutions and banks of all sizes are realising that the opportunities associated with fintech aren't about who has the deepest pockets - and so they're intensifying their innovation efforts," Pollari continued.
Meanwhile, the report discovered the rise of insurance technology (InsurTech) which hit US$1 billion across 47 deals in the first half of 2016.
"The decline in fintech financing and deals is in line with what we're seeing in the broader venture environment for startups, as VCs as well as crossover investors are pushing back harder on profitability and business model concerns. Despite the funding drop, previously under-invested areas of fintech such as an insurance area are gaining strong momentum among venture investors across geographies," said Anand Sanwal, CEO of CB Insights.