Strong investment of US$8.7 billion* in Q4 2017 propelled global fintech funding over the $31 billion mark for 2017, sustaining the high level of investment seen in 2016, according to the KPMG Pulse of Fintech report.
This brings the total global investment in the fintech sector over the past three years to $122 billion. While global fintech deal volume declined in Q4, the number of venture capital (VC) transactions exceeded 1,000 for the fourth consecutive year in 2017, with private equity (PE) deals reaching a new high of 139. Fintech M&A also ticked up for the year with 336 transactions in 2017.
Among fintech sub-sectors, both insurtech and blockchain saw record levels of VC investment and deal volume in 2017, with insurtech accounting for $2.1 billion across 247 deals, and blockchain generating $512 million of investment across 92 deals.
Geographically, the U.S. saw almost two-thirds of global fintech investment in Q4, with $5.8 billion in funding raised, and almost half of the 2017 global total, with $15.2 billion raised for the year. M&A accounted for the majority of this funding, with $8.7 billion in deals in 2017. U.S. PE funding in Q4 achieved its second highest quarter ever at $3.4 billion.
Fintech investment in Europe reached more than $2 billion in Q4 2017, with VC investment achieving a new record of $960 million—while total investment for 2017 reached $7.44 billion. In Asia, fintech investment moderated to $748 million for Q4 2017, to reach only $3.85 billion for all of 2017, after more than $10 billion in funding in 2016.
“The global fintech market has advanced considerably over the past few years,” says Ian Pollari, global co-lead, KPMG Fintech. “As the sector matures, investors have shifted from experimenting with fintech to seeking out value-driven opportunities. This is particularly true for corporates who continue to invest and see fintech as a strategic play that will help accelerate their digital transformation agendas.”
- Total global fintech investment was $31 billion, the same level of investment as 2016.
- The number of PE deals reached a record high of 139 in 2017, providing $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 $1.5 million, compared to $1 million in 2016, while the median deal size for early-stage rounds was also up to $5.5 million from $5.1 million in 2016. The median deal size of late-stage deals decreased year-over-year, from $19.1 million to US$16 million.
- Corporate participation in VC deals reached a record high of 19% in 2017, although corporate VC investment globally was down significantly year over year, with just $5.4 billion invested in 2017 compared to $9.6 billion invested in 2016.
* All figures in U.S. dollars.