Daily Management Review

Fintech startups attract record funding in 2018


Fintech startups, funded by venture capital, last year attracted a record $ 39.57 billion from investors all over the world, which is 120 percent more than in 2017, Reuters reports, citing data from a study by CB Insights.

According to the study, 1,707 transactions were completed, compared with 1,480 in 2017. The increase in funding was mainly due to 52 rounds of mega-investments of more than $ 100 million each, totaling $ 24.88 billion.

For example, investments in Ant Financial, a subsidiary of Chinese e-commerce giant Alibaba Group Holding Ltd, amounted to $ 14 billion, which is 35% of the total funding of fintech companies in the last year. In the last three months of 2018, five companies entered the cherished ranks of unicorns - enterprises whose value is estimated at more than $ 1 billion. These include credit card provider Brex, digital bank Monzo and data aggregator Plaid.

Venture investors are investing billions of dollars in fintech companies in the hope of capturing market share in existing financial institutions, offering simpler and cheaper digital financial services. Fintech startups have appeared in all financial sectors, including lending, banking, and asset management.

Financing of projects reached a record high in 2018, and CB Insights believes that because of this, the initial public offerings will probably be postponed for now. “Presumably, in 2019, IPO activity will remain weak,” the study says.

The largest jump in the number of transactions in 2018 was observed in Asia - an increase of 38% compared with the previous year, total investments amounted to $ 22.65 billion. In the US, fintech companies attracted a record $ 11.89 billion due to 659 investments. The number of transactions in Europe declined, but funding reached $ 3.53 billion.

source: reuters.com