After a significant decrease in funding in the fourth quarter of 2015, in Q1’16, global mega-rounds lifted investment into VC-backed fintech companies by over 150%.
According to the Pulse of Fintech, the quarterly global report on fintech VC trends published jointly by KPMG International and CB Insights, global investment in private fintech companies totaled US$5.7 billion in Q1’16, with US$4.9 billion specifically invested in VC-backed fintech companies across 218 deals.
The rise was mitigated by the fact that three mega-deals accounted for 54% of VC fintech investment in Q1’16. On a quarter-over-quarter basis, VC-backed fintech deal activity rose 22%. Q1’16 saw 13 US$50M+ rounds to VC-backed fintech companies, a slight rise from the 10 US$50M+ rounds in Q4’15, but a drop from the 18 mega-rounds in Q1’15.
Regionally, Asia saw funding to VC-backed fintech companies jump to US$2.6 billion in Q1’16 from US$0.5 billion in Q4’15, a rise which came on the back of the US$1B+ mega-rounds to JD Finance and Lu.Com (China accounted for US$2.4 billion).
North America saw both fintech funding and deals rebound as VC-backed fintech companies raised US$1.8 billion across 128 deals, an increase of 80 percent in funding quarter-over-quarter. Deal activity in North America is on pace to reach a new high in 2016 at the current run rate, as the 128 fintech deals registered over the three-month period was the largest quarterly total since Q2’15.
In Europe, VC-backed fintech deals rose from 37 in Q4’15 to 47 in Q1’16, totalling US$0.3B, led by UK-based WorldRemit and LendInvest rounds.
Meaningfully, in corporate fintech investment activity continues to play an important role in the fintech ecosystem, with deals standing at +24% in three of the past five quarters.