It’s already a record year for fintech investment thanks to Ant Financial

By Daniel Lanyon on Friday 13 July 2018

Editor's PickAlternative LendingDigital BankingSavings and Investment

The march of digital disruption on financial services is seeing a huge flood of money invested into fintech.

It’s already a record year for fintech investment thanks to Ant Financial
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The global fintech sector has smashed last year’s record for fundraising in the first half of 2018 by raising $41.7bn in just six months, according to research by Fintech Global.

While the total volume of cash invested is going up, the number of deals continues on a downtrend as the average size of funding rounds increases suggesting the fintech industry is maturing rapidly. Global fintech investments increased between 2014 and 2017 from $19.9bn to $39.4bn. 

A whopping $14bn investment in the Chinese payments giant Ant Financial in June, a record fundraising round for a private company, was the star of the first six months of 2018. The firm, spun off from internet giant Alibaba, is expected to use the cash to fund its forays into Africa and South America ahead of a public listing.

The Series C round was led by Temasek Holdings and GIC with co-investment from Sequoia Capital, Warburg Pincus and Malaysia’s Khazanah.

Even if the megadeal is disregarded, Q2 2018 still remains the strongest funding quarter to date, according to Fintech Global's research. Capital raised in the second quarter of this year has grown to reach a record of $32.2bn. This represents an increase of 3.2x compared to the same quarter last year.

Deal activity peaked back in 2015 at 2,251 deals. It has been declining since then. This downtrend is set to continue in 2018, with the 789 deals completed equating to just 43.9 per cent of last year’s total. Those deals valued below $1m decreased in share from 41 per cent to 15.7 per cent of the total over this period. In the first half of this year it stood at just 3.4 per cent of all deals.

Conversely, deals valued above $20m increased as a share of the total from 12.1 per cent in 2014 to 23.6 per cent in 2017. In the first half of 2018 this figure has jumped to 38.3 per cent.

The P2P and marketplace lending sector has the lowest proportion of deals valued less than $1m at 20.4 per cent. It also has the highest proportion of large deals, with a third of all investments in the sector valued above $20m.

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