U.S. venture capital (VC) investment in fintech companies rose to $1.2 billion in Q1’17, driven by late-stage deals, which reached the highest activity since Q1’16, according to KPMG International’s Q1 2017 The Pulse of Fintech report.
Non-VC fintech investment in the U.S. reached $300 million in Q1’17, leading to a total of $1.5 billion in fintech investment in the U.S. for this quarter.
Despite the strong quarter in the U.S., at a global level, fintech investment soft started in Q1’17, at $3.2 billion, down from $4.15 billion in Q4’16. Global fintech M&A also dropped, with $920 million in deal volume, down from $1.8 billion in the previous quarter, and less than half of the $4 billion in funding in Q1’16.
Global venture capital funding to fintechs held relatively steady at $2.3 billion in Q1’17.
Among key findings in US, the report highlights that a) interest in robo-advisory and insurtech is increasing, b) private equity firms, including those that are not technology-focused, are making inroads in the late-stage fintech arena with a sum of $1.2 billion in total PE deal value in Q1’17 across 11 deals, c) fintech M&A is off to a slow start in Q1’17 at $200m across 24 deals.
The largest concentration of U.S. fintech investment remains on the West Coast with 67.6% of the total value of deals and 39% of the total number of deals.
Key Global highlights include global median VC deal size for late stage deals dropped substantially in Q1’17 to $10m compared to the 2016 average of $15m,
investment in regtech continued its growth trajectory with $219 million across 26 deals in Q1’17, and Q1’17 insurtech activity remained on par with 2016 averages at 46 deals and $243 invested.