DEALSTREETASIA: Asia joined the world’s most funded regions for the fintech industry in 2014, with startups in this space raising total of $797 million, a report said. This growth was triggered mainly by fintech investments in China, and on a global level, fintech startups have raised about $6.8 billion during this period, according to data compiled by Life.SREDA, a venture capital firm headed in Russia.
The North American market was in first place at $3.9 billion, with Asia placing second with $797 million. The leading Asian sectors for fundraising in 2014 were online lending and scoring platforms ($411 million), PFM/PFP-services ($167 million), mPOS ($102 million) and trading services ($49 million), Life.SREDA’s report said.
The largest venture rounds are investments in Chinese online lending platforms: the P2P-lending service Renrendai raised $130 million from TrustBridge Partners, online lending service Fenqile raised $100 million from a group of investors, while the same amount was raised from BlueRun Ventures by a similar service called Qufenqi.
Among the funded projects from other segments are mobile point-of-sale (mPOS) service Qiandaibao which raised $80 million, trading and direct investment platform SnowFinance which raised $40 million and, service for SMEs Money Forward which raised $12.6 million and service for P2P transfers Fastacash (raised $4M in investments).
The regional leaders in terms of fintech startups development and funding raised in the Asian region are China, Japan, Hong Kong, Singapore, Malaysia, and Thailand. Life.SREDA VC’s report further concluded that the most promising markets for the mPOS industry are located in Asia. At the end of 2014 the total volume of transactions processed through mobile dongles was $55 billion, meaning mPOS-technologies pose serious competition to traditional POS-solutions, especially in countries where the penetration of POS-terminals is low.
The most promising markets for new players are Asian markets, with China having a turnover of mPOS transactions valued at $7 billion, led by market leaders Qiandaibao and QFPay. Southeast Asia had a significantly smaller turnover of $70 million, with participation by Plug’n’Play, AEON Easy Pay and LifePay Global.
2014 saw the first IPOs of fintech companies, setting parameters of other fintech deals and uprising the status of fintech to a serious venture industry. The first to undertake IPO was P2P-lending platform LendingClub, which raised $870 million at a $5.42 billion valuation. This was followed by Ondeck, an SME lending service, which became listed on stock exchanges, raised $200 million and was valued at $1.3 billion.
Evidence of serious investor attitudes to fintech startups is also seen in the increasing number of companies which exceeded a valuation of $1 billion – Lending Club, Stripe and Square were joined by Transferwise, Kreditech, Credit Karma, Wonga, and the abovementioned Ondeck.
The leading sectors in terms of the funds raised in 2014 are: online lending ($1.8 billion), online acquiring and mWallets ($1.649 billion), PFM/PFP-services ($959M), services for small and medium business ($783 million) and mobile acquiring ($491 million).
Vladislav Solodkiy, the managing partner of Life.SREDA, explained “China is the major growth driver for the “Asian” fintech industry, but all Asian countries have great potential for development of fintech companies due to high population, deep penetration of low-cost smartphones and lack of payment infrastructure.”
Solodkiy added “It is also important that due to the country peculiarities and cultural context a simple copy pasting of Western startups doesn’t work in Asian countries, which results in inception of many interesting local companies. For these reasons, in the past year, many foreign investors were actively investing in Chinese, Thai and Malaysian startups. They see a huge growth potential in these markets’”