The state of global fintech

In the third quarter, funding dipped 25% but on track to hit a record in 2017, particularly in Europe.

Global fintech funding in the third quarter of 2017 dipped 25% compared to the previous quarter to a total of $4 billion raised by fintech companies backed by venture capital (VC) across 278 deals.

However, according to a new report by CB Insights, “if the current run rate holds steady in Q4'17, global fintech investment dollars and deal activity could top new highs in 2017.”

Considering that the second quarter of 2017 set a record for investments raised since 2012— at $5.3 billion — so far this year, global fintech companies raised a total of $12.2 billion across 818 deals.

CB’s report, which includes a comprehensive, data-driven look at global financial technology investment trends, top deals, active investors, and corporate activity through the years, shows that the third quarter witnessed the emergence of one new fintech unicorn, Coinbase at a $1.56 billion valuation, and the IPO of one fintech unicorn, Zhong An Insurance. Also, one fintech unicorn, Prosper, raised a down round from a valuation of $1.77 billion $550 million.

The top 10 unicorns in the global fintech market:

• lu.com at a $18.5 billion valuation (Shanghai, China)
• Stripe at $9.2 billion (San Francisco, CA)
• One97 at $7 billion (Noida, India)
• SoFi at $4.5 billion (San Francisco, CA)
• GreenSky at $3.6 billion (Atlanta, GA)
• Credit Karma at $3.5 billion (San Francisco, CA)
• Oscar Health at $2.7 billion (New York, NY)
• Klarna at $2.5 billion (Stockholm, Sweden)
• Mozido at $2.4 billion (Austin, TX)
• Adyen Design at $2.3 billion (Amsterdam, The Netherlands)

Six of the top 10 unicorns are based in the US.

In the three months from July to September 2017, the number of fintech VC-backed funding rounds over $50 million stayed at about 18, while seed, angel, and Series A deals dropped for the fourth consecutive quarter to a five-quarter low.

NORTH AMERICA

The North American fintech market saw deal activity to VC-backed companies rise 13% on a quarterly basis, accounting for 45% of quarterly global deals. Overall, US VC-backed fintech startups raised $1.9 billion across 111 deals.

However, in the US fintech deals could fall below 2014 figures but still surpass the 2016 year-end high of $5.7 billion.

Among the top fintech investments in the US this past quarter :

• $250 million raised by Kabbage (Atlanta, GA)
• $151 million raised by Upserve (Providence, RI)
• $216 million raised by Bread Finance (New York, NY)
• $101 million raised by The Toast Blog (Boston, MA)
• $100 million raised by Blend (San Francisco, CA)
• $100 million raised by Coinbase (San Francisco, CA)
• $70 million raised by Betterment (New York, NY)
• $60 million raised by Raise (Chicago, IL)
• $50 million raised by Prosper (San Francisco, CA)
• $50 million raised by HighRadius (Houston, TX)

Of the top deals, only three involved companies in the Silicon Valley, while four were startups on the east coast.

EUROPE

European fintech funding deals hit a new record at $1.8 billion across 216 deals — the most deals of the third quarter.

At the current pace, in 2017, VC-backed funding for fintech companies based in Europe could hit or surpass the $2 billion mark.

Top deals in Europe:

• $66 million raised by Revolut (London, UK)
• $50 million raised by Receipt Bank (London, UK and Washington, DC)
• $47.8 million raised by Younited Credit (Paris, France)
• $40 million by Prodigy Finance (London, UK)
• $30 million raised by Onfido (London, UK)
• $25 million raised by Capital.com (Limassol, Cyprus)
• $25 million raised by Rimilia (Bromsgrove, UK)
• $24 million raised by habito (London, UK)
• $22.5 million raised by GoCardless (London, UK)
• $14 million raised by Tide (London, UK)

ASIA-PACIFIC

Fintech investment in Asia-Pacific remained strong in the third quarter of 2017 with 77 deals. Overall, fintech funding in Asia-Pacific surpassed the $5 billion mark, close to a record-high for the year.

Top deals in the area included:

• $220 million raised by Dianrong (Shanghai, China)
• $200 million raised by Sunshou Technology (Hong Kong, China)
• $161 million raised by Janalakshmi (Bangalore, India)