Investment in financial technology (fintech) ventures edged higher in the first half of 2020, led by strong gains in China and Australia and an increase in the U.K. that helped more than offset a drop in fundraising in the U.S. and some European markets, according to Accenture analysis of data from CB Insights, a global venture-finance data and analytics firm.
The total value of fintech deals globally rose 3.8%, to US$23.1 billion from US$22.3 billion in the first half of 2019, even as the COVID-19 pandemic spread around the world, grinding economic activity to a halt and prompting many companies to focus on digital technologies to keep their businesses functioning and better navigate the crisis.
The value of deals in the U.S., the world’s largest fintech market, fell 9.1%, to US$11.6 billion, with the number of transactions surging 73.5% to 1,013 as hundreds of startups signed up for the government’s Paycheck Protection Program (PPP) to help finance their day-to-day activities.
In the U.K., fintech investments climbed 3.8%, to US$2.7 billion, led by a 5.3% gain in funding to payments startups to US$1.1 billion and a 66% jump in insurtech deals to US$212 million. Fintech investments in China nearly tripled to US$2.3 billion in the first half of 2020, led by the US$1.3 billion Chinese wealth management platform Lu.com raised in a syndicated loan in April from a group of banks.
There were also large fundraising gains elsewhere in Asia Pacific. Investments in Australia almost tripled to US$1.2 billion, making the country the world’s fourth largest fintech market, while fundraising in Japan quadrupled to US$268 million and jumped 65% in South Korea to US$162 million.
Investments into payments startups and lending startups took the bulk of global fintech fundraising, accounting for 32% and 20% of the total, respectively, while insurtechs raked in 11%.
“The impact of the global pandemic has been swift and pervasive. In this environment, some companies have decided to accelerate their digital transformation journey, which is particularly true in the financial services sector and investors are increasingly looking at innovative fintech solutions to help banks, insurers and payments firms improve their future-readiness,” said Fergus Gordon, Banking Industry Lead, Growth Markets at Accenture.
Please see below some data from the Accenture analysis.
World’s five biggest fintech markets in the first half of 2020 (vs H1 2019 comparison):
- United States – US$11.6 billion (-9.1% from US$12.8 billion)
- United Kingdom – US$2.7 billion (+3.8% from US$2.6 billion)
- China – US$2.3 billion (+177% from US$819 million)
- Australia – US$1.2 billion (+189% from US$401 million)
- India – US$889 million (-3.5% from US$921 million)
Top five fintech deals in H1 2020:
- Lu.com (China/April 2020) – US$1.3 billion
- Stripe (U.S./April 2020) – US$600 million
- SecFi (U.S./Jan 2020) – US$550 million
- Revolut (U.K./Feb 2020) – US$500 million
- WEX (U.S./Jun 2020) – US$400 million
Fintech investments in mainland China rose sharply, mostly due to the Lu.com deal, which accounted for more than half of all fundraising in the country, with other large transactions including the US$251.5 million invested by JD.com into fintech unit JD Digits in June, US$100 million raised by software as a service provider Jushuitan in June and US$85 million in April from 4Paradigm, which uses artificial intelligence to help financial firms detect fraud and improve risk. The number of deals fell to 68 in the first half of 2020 from 79 in the first half of 2019.
Hong Kong fintech fundraising dropped 16.6% to US$126.3 million in the first half of 2020 from US$151.5 million in the same period a year earlier. Alternative lender Oriente raised a combined US$70 million in two separate transactions in March and April, while crypto finance startup Amber Group raised US$28 million in February.
As in previous years, Accenture analyzed fintech investment data from CB Insights, a global venture-finance data and analytics firm. The analysis included global financing activity from venture-capital and private-equity firms, corporations and corporate venture-capital divisions, hedge funds, accelerators, and government-backed funds. The investment data ranged from 2010 through the first half of 2020 and included equity and non-equity financing. Fintech companies are defined as those that offer technologies for banking and corporate finance, capital markets, financial data analytics, insurance, payments and personal financial management.