China activity drove US$5.4 billion in Asia fintech funding in 2016

By e27

Asia’s fintech funding was level with US$5.5 million raised in the US fintech industry

Fintech startups in Asia raised a record US$5.4 billion from 165 deals in 2016, driven largely by large investments in China, according to a new report from CB Insights. A whopping US$4.6 billion of total funding came from just 46 deals in China.

Furthermore, the increased investment numbers are driven by huge rounds — the largest round was a US$1.2 billion round from Lufax while the tenth-largest on the list is a US$74 million round by QuantGroup. With the possible exception of a US$160 million deal for WeLab in Hong Kong, the entire top-10 list of funding rounds came out of China.

Total Asian fintech funding rose by US$600 million from 2015 when startups raised a total of US$4.8 billion. In 2014, Asia’s fintech companies raised US$1.1 billion and in 2013 it was US$300 million.

Also, the report chose to omit the Ant Financial US$4.5 billion fundraising (which was a private share placement and the world’s largest-ever tech funding round).

Asia’s fintech funding statistics approximate to the US$5.5 billion raised in the United States in 2016 — with a notable difference that it took 422 deals to reach that number in America.

The total number of deals maintained its 5-year stretch of growth, albeit the three deal increase from 2015 to 2016 was a sizeable slowdown from the major jump between 2014 and 2015 (134 deals to 162).

For China specifically, 2014-2016 saw the number of deals flatten (44, 42, 46 respectively) while the amount raised skyrocketed (US$800 million, US$2.8 billion, US$4.6 billion).

How did it break down?

While overall Asia fintech funding increased in 2016, it dipped in the second half the year. 35 deals were inked in Q4 2016 — which was a drop from both Q4 2015 (38 deals) and Q3 2016 (37 deals).

Q4 2016 was the best quarter in 2016 for individual startups — the median amount raised was US$3.5 million. But, that was still below the US$5 million number from the year before.

Below is an “average deal share” percentage from 2016 based on the numbers from CB Insight.

It is not a perfect statistic because averaging a quarterly deal-share percentage does not take into account other rounds from the quarter (the numbers below do not equal 100). But, it is useful to get an idea of what kind of fintech deals are getting inked (for example, Series B funding never dipped below 17 per cent of deal share, a pretty high number for a late-stage round).

  • 31 per cent of deals were seed round or angel investments
  • 23.75 per cent were Series A rounds
  • 22.5 per cent were Series B
  • 10 per cent were Series C
  • Series D and Series E made up of 2 per cent of round share
  • “Other” accounted for 8.5 per cent

Despite the reality that most of the major fintech rounds happened in China, there is an impact in Southeast Asia. For example, the aforementioned Ant Financial made its first foray into Southeast Asia with an investment into Ascend Money. Also, over the weekend, Ant entered the Philippines through a strategic partnership with Mynt and Ayala.

VCs and Corporates

For deals in Asia, corporates participated in about 40 per cent of VC-backed deals and over the year it ranged from 31 per cent to 49 per cent quarter-by-quarter (by comparison Q4 2015 saw 45 per cent of deals involve corporates).

“Corporates saw slightly less deal share than the same quarter last year when corporates participated in 45 per cent of Asian fintech deals,” the report read.

The most active investors were, in order, 500 Startups, East Ventures, Sequoia Capital India and SBI Investments as the top-four. Tied for fifth was a group that included IDG Capital Partners, Golden Gate Ventures, Accel Partners India, IMJ Investment Partners, Arbor Ventures.

P2P lending company Lufax took home the gold as the company who raised the most money on the list with a US$1.2 billion financing.

First appeared at e27