Fintech firms raised record $53.5b in 2018: Study

120% surge due largely to 52 mega rounds; Asia sees biggest jump in investment deals

NEW YORK • Venture capital-backed financial technology firms raised a record US$39.57 billion (S$53.5 billion) from investors globally last year, up 120 per cent from the previous year, according to research by data provider CB Insights published yesterday.

Funding was raised through 1,707 deals, up from 1,480 in 2017, the research said. The surge in funding was due in large part to 52 mega rounds, or investments larger than US$100 million, which were worth US$24.88 billion combined, according to the research.

A US$14 billion investment in Ant Financial - the payment affiliate of Chinese e-commerce giant Alibaba Group Holding - alone accounted for 35 per cent of total fintech funding last year, the research said.

In the last three months of last year, five companies joined the coveted ranks of fintech "unicorns", or companies valued at over US$1 billion each. These include credit card provider Brex, digital bank Monzo and data aggregator Plaid.

Venture capital investors have been pouring billions of dollars into fintech companies in the hope that they can gain market share from incumbent financial institutions by offering easier-to-use and cheaper digital financial services.

Fintechs have emerged globally across all sectors of finance, including lending, banking and wealth management.

While the large rounds minted new unicorns and led funding to hit a record high last year, CB Insights estimates that these will likely delay initial public offerings (IPOs). "IPO activity is likely to remain lacklustre in 2019," the research reads.

Asia saw the biggest jump in number of deals last year, growing 38 per cent from the previous year and accounting for a record US$22.65 billion, according to the study.

In the United States, fintechs raised a record US$11.89 billion through 659 investments, while the number of deals dropped in Europe, but funding reached a record US$3.53 billion.

REUTERS

A version of this article appeared in the print edition of The Straits Times on January 30, 2019, with the headline 'Fintech firms raised record $53.5b in 2018: Study'. Print Edition | Subscribe