Fintech Funding Report: Nearly $100 Billion Invested Across 2,456 Financial Technology focused Deals in H1’21

Big Four auditing firm KPMG is reporting record-breaking VC investment in Fintech-focused businesses during H1 2021.

KPMG’s Pulse of Fintech report reveals that investment into Fintech firms during H1 of this year reached $98 billion.

Nearly $100 billion was allocated towards Fintech investment (M&A, PE and VC) in H1’2021,compared with $121.5 billion during all of last year, the report confirmed while noting that global venture capital investment in Fintech hit an all-time record $52.3 billion in H1’21 – “more than doubling the $22.5 billion seen in H2’20.”

As stated in a release, the overall global Fintech funding across M&A, PE, and VC deals set new highs this past H1’21, according to KPMG’s Pulse of Fintech, which is a bi-annual report on Fintech investment trends.

As mentioned in the report, dry powder cash reserves, “increasing diversification in hubs and subsectors, and strong activity across the world contributed to the record start to 2021, with funding increasing from US$87.1 billion in H2’20 to US$98 billion in H1’21.”

Under “pressure” to increase the “velocity” of their digital transformation efforts and to improve their digital capabilities, corporates were quite active in venture deals, “participating in close to $21 billion in investment over nearly 600 deals globally, with many realizing it’s quicker to do so by partnering with, investing in, or acquiring fintechs.”

Ian Pollari, KPMG’s Global Fintech Co-Lead, stated:

“Overall investment in fintech surged to a record high in the first half of 2021 as investors, particularly corporates and VC investors, made big bets on market leaders in numerous jurisdictions and across almost all subsectors. Large funding rounds, high valuations and successful exits underscore the thesis that digital engagement of customers that accelerated during the pandemic is here to stay.”

Looking ahead to H2’21, overall Fintech investment is on track to stay “robust” in most regions of the world, the report noted while adding that the payments space is “expected to remain a dominant driver of fintech investment, revenue-based financing solutions, banking-as-a-service models, and B2B services are expected to attract increasing levels of investment.”

Due to the increase in digital transactions and the rise in cyberattacks and ransomware, cybersecurity solutions will “likely also be high on the radar of investors,” the report added.

Anton Ruddenklau, KPMG’s Global Fintech Co-Lead, remarked:

“Fintech is an incredibly hot area of investment right now—and that’s not expected to change anytime soon given the increasing number of fintech hubs attracting investments and growing deal sizes and valuations. As we head into H2’21, we anticipate more consolidation will occur, particularly in mature fintech areas as fintechs look to become the dominant market player either regionally or globally.”

Here are some H1’21 highlights shared in the report:

  • Global “fintech investment reached US$98 billion across 2,456 deals in H1’21 – far outpacing last year’s annual total of $121.5 billion across 3,520 deals.”
  • M&A deals “continued at a very healthy pace, accounting for $40.7 billion across 353 deals in H1’21, “compared to $74 billion across 502 deals during all of 2020.”
  • Late-stage venture valuations more than “doubled year-over-year, with global median pre-money valuations for late stage deals rising from $135 million in 2020 to $325 million at the end of H1’21.”
  • Corporate participation in VC investment in fintech “was incredibly strong in H1’21, with US$20.8 billion of investment globally. Both the Americas (US$13 billion) and EMEA (US$5 billion) saw record levels of CVC-affiliated investment.”
  • Global investment in cybersecurity “reached a new annual record at mid-year—rising from US$2.2 billion in 2020 to over US$3.7 billion in H1’21.”
  • Cross-border M&A deal value “rose dramatically, from $10.3 billion during all of 2020 to $27.7 billion in H1’21 alone.”
  • PE firms embraced the fintech space in H1’21, “contributing $5 billion in investment to fintech— surpassing the previous annual high of $4.7 billion seen in 2018.”
  • Total fintech investment in the Americas “was very robust with over US$51 billion in investment across 1,188 deals.”
  • The EMEA region “saw US$39.1 billion in fintech investment in H1’21, including a record US$15.1 billion in VC funding.”
  • Fintech investment in the Asia-Pacific region “continued at a more moderate pace, reaching $7.5 billion across 467 deals, compared to $13.4 billion across 714 deals during all of 2020.”

You may view the complete report here.

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