Investments in fintechs have risen sharply over the past year despite the ongoing corona pandemic. In 2021 investors pumped more than $200 billion into start-ups en scale-ups active in the world of financial technology, according to research by KPMG.
During the twelve months of 2021 more than 5,600 deals closed successfully – transactions of all shapes and sizes, from small investments in start-ups (seed investments) and investments in growing start-ups (series A or B investments) to investments in established players (series C or D investments) and complete acquisitions.
In total, $210 billion was raised by fintechs worldwide, almost $90 billion more than the year previous but slightly less than the amount invested in 2019: $214 billion.
European fintechs (in KPMG’s report the region is combined with the Middle East and Africa, or EMEA) set a new record with total incoming investments of $77 billion.
Venture capital was the largest segment for fintechs. Venture capitalists closed some 4,700 deals, tallying up to $115 billion in deal value. Private equity firms (who focus more on late-stage and scale-up fintechs) invested $12 billion in young companies across approximately 140 deals.
Corporate investments in fintechs (also known as corporate venturing) rose slightly compared to the previous year: $83 billion in 2021 versus $76 billion in 2020. However, the number of deals rose sharply, by nearly 300 to a new record high of 820.
The biggest fintech investment of the year was noted by Generate, a US fintech that raised $2 billion. Other major deals were: Klarna ($1.2 billion), Nubank ($1.1 billion), Chime ($1.1 billion), FTX ($1.0 billion), and N26 ($900 million).
In the acquisitions space, the acquisition of Refinitiv by the London Stock Exchange was by far the largest transaction in the fintech landscape ($14.8 billion). In the second half of last year, digital payment services provider Nexi paid $9.2 billion for Denmark-based payment processor Nets.
Across the board, payment services, cybersecurity, insurtech (fintech in insurance) and sustainability were the most in-demand investment areas. Investments in blockchain technology and cryptocurrencies grew the fastest, from $5.4 billion in 2020 to more than $30 billion last year.
CHART: Total investment activity (VC, PE and M&A) in fintech in EMEA 2018—2021*. pg 49
Heading into 2022, fintech investment is expected to remain very robust, said Anton Ruddenklau, Global Fintech Leader at KPMG. “We’re expecting activity to grow in mature markets but also less developed fintech markets, including Africa, Southeast Asia, and Latin America. M&A activity is also expected to rise, with deal values growing as both corporates and fintechs look to grow and build scale.”
“Given how many banks are beginning to see the major limitations inherent in their legacy architecture and technologies, there will likely also be a surge in investment into banking replacements able to help them rethink core banking services. Cryptocurrencies and blockchain are expected to remain very hot areas of investment in 2022.”
KPMG’s ‘Fintech Pulse’ report is published every six months. KPMG is a global accountancy and consultancy firm with more than 230,000 employees working from offices in 150+ countries.
Credit: Source link
