KPMG and CB Insights release their latest quarterly fintech venture capital (VC) report, showing UK deals held steady but the value of those deals fell during the second quarter of 2016.
Despite a number of deals being delayed in Q2’16 as investors digested the Brexit result, the number of VC-backed fintech deals in the UK held steady quarter-over-quarter. However, the total value of those deals dropped from $117 million to $103 million, according to the latest Pulse of Fintech.
Across Europe, VC-backed fintech funding lifted to a three-quarter high in Q2’16, rising 22% on a quarter- over -quarter basis to hit US$369M across 43 deals. Germany lead the way in Europe, outpacing the UK by 80%.
However, Europe and the UK have fared better than the Global average. Amid a tougher climate for marketplace lenders and a drop in mega-round activity, globally investment to VC-backed fintech startups fell 49%. Despite this decline, VC investment in fintech is on pace to exceed 2015 results.
Warren Mead, Global Co-Leader of Fintech, KPMG International, says: “Regardless of Brexit, the UK will not give up its role as Europe’s fintech leader easily, the FCA’s sandbox and the recent announcement of a fintech bridge with Singapore clearly demonstrate the UK’s commitment to fostering its strong fintech ecosystem.”
Warren adds, “Traditional financial institutions and banks of all sizes are realising that the opportunities associated with fintech aren’t about who has the deepest pockets – and so they’re intensifying their innovation efforts. Therefore, despite the global decline in Q2, overall fintech funding remains on track to surpass 2015 levels.”
Anand Sanwal, CEO of CB Insights, added: “The decline in fintech financing and deals is in line with what we’re seeing in the broader venture environment for startups, as VCs as well as crossover investors are pushing back harder on profitability and business model concerns. Despite the funding drop, previously under-invested areas of fintech such as an insurance area are gaining strong momentum among venture investors across geographies.”