Decreased fintech investment in China accounted for much of the decrease in investment in Asia, KPMG explained. According to the firm, China saw just US$45.8 million in investment in Q4'17, while total investment in 2017 was US$1.33 billion.
"Increasing government controls and regulations over fintech in China have kept many investors on the bench during 2017. Only one US$100 million+ deal occurred in Q3 in China, which is the acquisition of BiWang Group by CollinStar Holdings," KPMG pointed out in its recently released KPMG Pulse of Fintech Report.
According to the report, VC funding in fintech faltered considerably in Asia as well, dropping almost 50% quarter over quarter to US$550 million.
On the positive side, corporate participation in fintech deals skyrocketed in Asia during Q4, rising from a twelve-quarter low of 11% in Q3'17 to reach a new high of over 31 percent, the firm added.
The top five fintech deals in the region in Q4 are as follows:
- WeLab (lending firm in Hong Kong): US$220 million, Series B
- GoSwiff (payments/transactions firm in Singapore): US$100 million, M&A
- BiWang Group (Institutional/B2B firm in Shenzhen, China): US$100 million, M&A
- PolicyBazaar (Insurtech firm in Gurugram, India): US$77 million, Series E
- Onlyou (Institutional/B2B firm in Shenzhen, China): US$45 million, late-stage VC
Key 2017 annual highlights from the report
- Total global fintech investment was US$31B, the same level of investment as 2016.
- The number of PE deals reached a record high of 139 in 2017, providing US$17B 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 US$1.5M, compared to US$1M in 2016, while the median deal size for early-stage rounds was also up to US$5.5M from US$5.1M in 2016. The median deal size of late-stage deals decreased year-over-year, from US$19.1M to US$16M.
- Corporate participation in VC deals reached a record high of 19 percent in 2017, although corporate VC investment globally was down significantly year over year, with just US$5.4B invested in 2017 compared to US$9.6B invested in 2016.
Key Q4'17 highlights
- Global fintech investment rose marginally from US$8.5B in Q3'17 to US$8.7B in Q4'17.
- Global fintech deal activity dropped to 307 deals in Q4'17, from 327 in Q3'17, with VC deals dropping from to 227 from 250. While noticeable, the decline in fintech deal activity has been far more moderate compared to declining deal activity in other technology sectors.
- Global VC funding dipped slightly from US$3.7B to US$3.2B quarter over quarter.
- Fintech exit activity achieved a new high of US$2.4B in Q4'17, highlighting the growing maturation of some fintech subsectors.
“The fintech market is continuing to expand and evolve,” said Murray Raisbeck, Global Co-Lead, KPMG Fintech. “So much is happening - from the increasing focus on insurtech and blockchain, to the ramifications of maturing companies, such as challenger banks, looking to expand and grow. With regulations changing, particularly in Europe, 2018 will likely be an exciting year.”
Total fintech funding in Asia was US$3.85 billion in 2017—a massive drop-off from the more than US$10 billion invested in 2016 while the amount in Q4 2017 declined to US$748 million across 38 deals after a solid US$1 billion+ in Q3, said KPMG.