Fintech investment in US hits record $52.5bn
Fintech investment in the US hit a record $52.5 billion during 2018, driven by mergers and acquisitions, and venture capital (VC).
Pulsating and powerful
According to KPMG’s “2018 Pulse of Fintech” report, it was a happy year in the US with VC accounting for more than half of the 1,061 fintech deals.
Deals include the massive $17 billion investment in October by Blackstone Group into Refinitiv – formerly the financial and risk group of Thomson Reuters, the $3.5 billion buyout of Blackhawk Networks by Silver Lake and P2 Capital Partners in June and a $3.4 billion buyout of VeriFone by Francisco Partners in August.
VC investment related to fintech in the US was particularly strong last year, if overshadowed by the large M&A and buyout activity.
A “significant” number of $100 million+ mega deals – including a $392 million raise by Dataminr, a $375 million raise by Oscar, $363 million raise by Robinhoood and a $300 million raise by Coinbase – helped propel fintech-based VC investment from $7 billion in 2017 to over $11 billion in 2018. The number of fintech deals also reached a new high of 773, up from 661 the previous year.
KPMG’s 75-page report naturally looked at the global picture, which showed that fintech investment across the world doubled to $111.8 billion in 2018, driven by mega deals.
Some of these mega deals include Vantiv’s acquisition of Worldpay for $12.86 billion in Q1, Ant Financial’s “record-shattering” VC raise of $14 billion in Q2, and Blackstone’s investment in Refinitiv (as mentioned above).
The Americas, Europe and Asia all saw “significant” growth in fintech investment, although the total number of deals globally “only increased slightly”.
This modest increase was driven primarily from the US and the Americas, where deal volume saw solid increases year-over-year. Both Asia and Europe saw a decline in their fintech deal volume, mirroring a trend seen across the broader investment market.
M&A and buyouts accounted for the largest fintech investments during the year in both the Americas and Europe, while VC investments reigned supreme in Asia.
At a technology level, KPMG says payments and lending continued to attract the most significant investment dollars globally, although insurtech and regtech were also quite high on the radar of investors.
According to KPMG, the outlook is positive for fintech investment heading into 2019, in part due to the strong and highly diverse fintech hubs cropping up around the world, as well as growing recognition from both incumbents and scaled fintech companies that M&A is an important part of their growth strategies.
KPMG notes that there is likely to be an increase in investment focused on solutions targeted to the needs of unbanked and underbanked people in the developing world, including southeast Asia and Africa, even as more developed regions see a growth in fintechs that can reduce operating costs, improve service quality and expand customer reach.
Just two days ago (12 February), a separate report from industry body Innovate Finance revealed that it was another good year for UK fintech as investment rose by 18% to a record $3.3 billion in 2018.
