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Global fintech funding booms to record high, Europe dips

While the world has reached a new quarterly high, European fintech is seeing a lull in investment cash. Here’s a handy round-up of all you need to know.

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As 2018’s first quarter comes to a close, results show that venture capital-backed fintech companies raised $5.4bn globally across a total of 323 deals. According to CB Insight’s latest report, this is a new quarterly record for fintech, putting it on pace for a new global high this year as funding rebounds after falling in the last two quarters.

Global mania

The United States saw the largest boost, closing $157m over 87 seed and series A-stage deals in the last three months. This was an uptick of 38 per cent compared to Q1 2017, taking the region to a new five quarter high.

South America also has a reason to celebrate, surpassing 2017’s entire funding total in just this quarter. The region raised $271m in 2018’s first quarter, thanks to a sizeable $150m boost from Nubank, a mobile banking start-up and newly-crowned “unicorn”.

However Europe dipped to a five-quarter low this month, despite seeing two mega-rounds from digital banking firms n26 and Atom Bank. VC-backed fintechs raised just $933m across 63 deals in the first quarter, down 32 per cent from the same period in 2017.

2018’s ten largest rounds so far were all above $100m, and included some familiar names like trading platform eToro and insurtech firm Oscar Health. Asia saw the largest quarterly spike of funding at $2.02bn, claiming four out of those ten rounds.

Sector breakdown

Elsewhere, investment into alternative lending start-ups is on pace for a new low: lending fintechs saw just $0.9bn this quarter, showing a declining rate from 2016 and 2017’s totals of $4.3bn and $4bn respectively. In addition, China is losing its dominance in Asia’s alternative lending scene, as the rest of Asia took in 64 per cent of deals over the last three months compared to just 22 per cent in 2014.

Wealthtech, on the other hand, rose to a five-quarter high this month at $546m. This was boosted by strong rounds from robo advisory firms like Wealthsimple, which raised a $51m Series B in February, and Stash’s $37.5m Series D.

The trendy Initial Coin Offering (ICO) seems to be losing its momentum as a means of raising funds, with just £113m completed in March compared to $215m in January earlier this year. Blockchain, however, is bouncing back: the sector closed 30 deals compared to only 17 in the second quarter of 2017.

Incumbent activity

While banks in the United States and Europe slowed on their investments in fintech in 2017 compared to numbers from the year before, this quarter saw European banks pick up the pace with 11 new deals completed. Santander invested in fintechs like Roostify, AutoFi and Payever, while BBVA upped its stake in Atom Bank and made a new venture with banking platform solarisBank.

Top banks have also been picking up in fintech acquisitions this quarter, with 40 per cent of the 20 fintech firms acquired since 2013 occurring within the last seven months. Goldman Sachs’ purchase of personal finance app Clarity Money was the most recent of these, as it incorporated the start-up’s 1m customers into the branding of its online lending fintech Marcus.

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