Asia fintech investment on par with West but is more concentrated

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Driven by large whales, two deals accounted for 40 per cent of dollars spent in Asia’s fintech scene

 

Over US$2 billion was invested in Asian fintech companies during the first quarter of 2018, a 188 per cent spike from the end of 2017 when US$700 million was invested in the scene, according to data from CB Insights.

That makes last quarter the second most active 12-week period over the past two years. In Q2 2017, US$2.7 billion was invested the fintech space.

However, in Asia the money continues to be concentrated with a comparably low amount of deals as compared to North America. The industry saw 47 investments in Q1, a slight increase from the 43 in Q4 and a dip from the 56 deals from Q3 2017 and 60 the quarter before.

By comparison, North America had 87 deals last quarter accounting for US$2.1 billion. North America and Asia both had the same amount of mega deals (defined as being worth more than US$100 million) at four.

To highlight this fact, two deal, a US$650 million investment into OneConnect and a US$160 deal into WeCash, accounted for 40 per cent of the entire amount invested into fintech last quarter.

This means that the money being invested in fintech across Asia is on par with North America but it is far more condensed, with fewer companies raising more money.

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Another statistic to highlight this reality is there are zero fintech unicorns outside of China and India (China has six while India has two). Europe has four and the US has 16. Finally, the two fintech unicorn births last quarter were from the US (UiPath) and Brazil (Nubank).

Other trends to note

CB insights noted that financing into alternative investment companies (typically SME lending startups or micro lending firms) has moved away from China.

In 2014, 78 per cent of funding in this sector came out of the Middle Kingdom while in 2018 the number is only 36 per cent. This puts data a common knowledge fact in the South and Southeast Asia which is technology is trying to fill the banking gap as millions of people come online for the first time.

Also of note is the ICO fundraising strategy is slowing down significantly. March 2018 saw the fifth worst month for token sales (US$507 million) and the lowest since the blockchain boom of last year. ICOs haven’t raised below US$600 million since September 2017.

Furthermore, it follows a trend of a monthly slide that has been occurring since a January peak of US$1.6 billion raised via 170 ICOs. February saw US$1.2 billion on 121 token sales and the March number cited above was the result of 113 ICOs.

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However, VCs were more active in fintech-Blockchain funding by investing US$163 million into 30 startups. The investment amount is lower than the US$269 million raised in Q4 2017 but the deal number jumped from 23 to 30.

For startups looking for ideas, tokenised securities is where VCs are looking to invest.


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Source: e27