Fintech funding saw a strong rebound in Q2 2017 as global merger and acquisitions (M&A) and private equity (PE) fintech deals helped drive the sector overall, according to KPMG and CB Insights – a quarterly report on global fintech investment.
On a global basis, total fintech funding reached $8.4 billion in the last quarter, up more than 120 percent from $3.6 billion in Q1 2017.
A few mega-rounds buoyed global fintech funding significantly, led by the buyout of Toronto-based payments company DH by US-based Vista Equity Partners, setting $3.6 billion funding round, which accounted for more than half the total fintech funding during the quarter.
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European funding volumes increased overall. Fintech firms in Europe attracted $2.0 billion in VC investment in Q2 2017, the best figure in more than a year although still notably lower than the $5.8 billion seen in Q4 2015. Within Europe, Germany continued to thrive, outstripping the UK which saw deal value rise to $1.4 billion, although transaction volume remained steady.
Excluding the DH deal, activity in the US, including M&A and VC investments, totaled 105 deals in the second quarter. Total VC investment in the US rose to $2.0 billion, including five of the top 10 fintech deals globally – AvidXchange (US$300 million), Bright Health (US$160 million), Pos Portal (US$158 million), Fast Match (US$153 million) and Addepar (US$140 million).
On a positive note, the median deal size increased year-over-year for both seed rounds and early-stage VC deals. In addition, massive late-stage fintech financing contributed to keep total deal value healthy.
Commenting on the results, Ian Pollari, Global Co-Leader for Fintech, and a partner for KPMG Australia, said: “Fintech investment has made a comeback this quarter – a sign of renewed investor intent – particularly in the US and Europe. Corporates are increasingly accounting for significant amounts of fintech investment – a trend that isn’t likely to let up given the need for financial institutions to digitize the customer experience, become more cost efficient, and find new sources of earnings growth.”