According to the latest report by venture intelligence platform CB Insights, Asia recorded a total of 77 fintech deals in Q3, compared to 79 in the previous quarter. However, funding saw a steep drop as total deal value plunged 48 per cent to $1.4 billion in Q3 from $2.7 billion in the previous quarter. Why the decline in Q3? A sharp quarterly decline in fintech funding in India appears to be the primary reason. A blockbuster second quarter, which saw Paytm’s parent One97 Communications raising a staggering $1.4 billion from SoftBank, proved to be a tough act to follow. The year 2017 so far for fintech funding in Asia The decline in Q3 notwithstanding, the region is on track to witness a strong year. Total fintech deals in the year so far grew to 203, only 10 deals short of 2016’s total. At $5 billion, funding so far is also on pace for a record year. At the current run rate, VC-backed fintech deals in Asia are on track to rise 29 per cent from 2016, CB Insights noted in its report. A notable stat here is that, in Q3, Asia saw six VC-backed fintech companies raise rounds of over $50 million, marking a five-quarter high. Overall, Asia’s $50-million+ fintech deals were worth $864 million of funding during the last quarter. Deal share by stage: The share of seed stage fintech deals in Asia declined slightly to 34 per cent from 38 per cent in the previous quarter. Both Series A and Series E+ deals saw an increase in their share of the overall deal pie. A weak quarter for CVCs: Corporate participation in fintech deals making dropped to 25 per cent in Q3, a five-quarter low. This means that VCs and other investors have upped their deal making, claiming 75 per cent of quarterly deal share in Q3, a five-quarter high. Top 10 deals: Half of the top 10 deals were worth over $100 million. All of the top 10 largest fintech deals in Asia involved companies based either in India or China. The most active VC investor in Asia fintech startups is… 500 Startups, unsurprisingly. The venture capital firm has now maintained its position at the top of the leaderboard for the fifth consecutive quarter. SBI, East Ventures and Matrix Partners were the next most active fintech VC investors in Asia in the third quarter. 500 Startups was also the most active venture capital investor in this space globally, while SBI Investment ranked sixth. Global fintech funding VC-backed fintech companies raised $4 billion across 278 deals globally in Q3. While the number of deals remained steady in the quarter, overall funding fell 25 per cent from the second quarter’s record $5.3 billion. At the current run rate, global fintech funding and deals could touch new highs in 2017, CB Insights said. China – A slight decline in deals and dollars China saw fintech deals drop 19 per cent on a quarterly basis in the third quarter. Overall VC funding to fintech startups, too, declined slightly to $0.8 billion from the previous quarter’s $1 billion. India – A victim of its own success? The number of VC-backed fintech deals in India saw a little dip in Q3 but it was funding that nosedived a whopping 76 per cent on a quarterly basis. However, funding was up 80 per cent from third quarter of the previous year. Fintech Unicorns There are now 25 unicorns globally in the fintech space, the report states, and only one of these – Coinbase, valued at $1.6 billion – was added during the last quarter. The three months ended September 2017 also saw Asia fintech unicorn Zhong An Insurance go public at a $10 billion valuation. A former unicorn, Prosper, crashed out of the club, as its valuation fell by more than 50 per cent to only $550 million in Q3 ’17, when compared to $1.8 billion in Q2 ’15. Asia accounts for two of the top three fintech unicorns globally, with China’s Lu.com, that is valued at $18.5 billion, continuing to maintain its pole position, and India’s One97 (Paytm), which commands a valuation of $7 billion, keeping its third place.
Asia saw fintech funding by venture capital firms decline from the second quarter to the third but the blip is unlikely to dampen the year’s momentum