17 August 2017
Find out more

Global fintech funding plunges in 2016 but expected to regain momentum in 2017

21 February 2017  |  9961 views  |  1 Success!

Funding for fintech companies around the world plummeted in 2016, with American and European firms experiencing a particularly sharp drop in investment, according to a report from KPMG and PitchBook which nevertheless predicts a bumper 2017.

Total fintech funding declined by almost 50%, falling to $25 billion in 2016 from $47 billion in 2015.

In the US, total funding fell from $27 billion to just $12.8 billion, while the total number of deals was down from 615 to 489, a drop blamed by the report on political and regulatory uncertainty, a decline in mega-deals and investor caution.

For Europe, the picture was even bleaker, with total fintech investment dropping 80% from $10.9 billion in 2015 to $2.2 billion last year. Europe's fintech leader, the UK saw deal value down from $4.6 billion to $654 million, although transaction volume remained steady.

KPMG says that London continues to be seen as a true global financial centre with a vibrant tech startup sector and that, while Brexit-related uncertainties are a concern, 2016 is likely to be just a time when investors "paused for breath".

In fact, KPMG is bullish about fintech's prospects on both sides of the Atlantic, highlighting the "game changer" that is PSD2 in Europe and the rise of insurtech and new technologies such as blockchain, AI and the Internet of Things.

Meanwhile, Asia, led by China, was one part of the world that held steady last year, with deal funding reaching a new record high of $8.6 billion invested compared to $8.4 billion in 2015. Just three mega-rounds accounted for over half of the total.

"2017 is likely to be a pivotal year for fintech in the US and around the world," says Brian Hughes, co-leader, KPMG enterprise innovative startups network. "Because valuations have corrected, the market has set up a perfect storm for IPOs and M&A to happen in 2017. An increasing number of exits will likely stimulate demand for new investments thanks to the dry powder already in the market."

Read the full report:» Download the document now 2.8 mb (PDF File)

Comments: (1)

Gerard Hergenroeder
Gerard Hergenroeder - IBM - New York | 21 February, 2017, 14:15

I am not surprised. The market got a little ahead of itself. The Fintechs do need to work on their value propositions to secure their next round of funding. Right now with interest rates moving higher their value may even decrease.

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related company news

 

Related blogs

Create a blog about this story (membership required)
visit www.worldpaymentsreport.comvisit www.niceactimize.comdownload the paper now

Top topics

Most viewed Most shared
Coinbase raises $100mCoinbase raises $100m
10358 views comments | 14 tweets | 14 linkedin
DBS Bank launches online car selling marketplaceDBS Bank launches online car selling marke...
9746 views comments | 13 tweets | 11 linkedin
China preps central clearing house for mobile payments providersChina preps central clearing house for mob...
9638 views comments | 8 tweets | 15 linkedin
HSBC automates documentary trade processing with IBMHSBC automates documentary trade processin...
8560 views comments | 6 tweets | 21 linkedin
Monzo appoints Curve co-founder Foster-Carter COOMonzo appoints Curve co-founder Foster-Car...
8044 views comments | 1 tweets | 2 linkedin

Featured job

Find your next job