Investments

VC Fintech Investing Declines In First Quarter

Investing on the part of venture capitalists in financial technology startups — otherwise known as FinTechs — declined during the first quarter of 2019, with China feeling the most pain.

That’s according to a report in The Financial Times citing research by CB Insights, the market research firm, which found FinTech funding from venture capitalists around the world declined 13 percent in the first three months of the year to $6.3 billion. The number of deals did increase to 445 during the time frame, noted the report. In the first quarter of 2018 venture funding going toward FinTechs stood at $6.2 billion.

According to The Financial Times, in China funding for FinTech startups declined 89 percent to $192 million during the first quarter of 2019. China is now behind India as investors look for the next bastion of growth. Asian funding fell under $1 billion for the first time in five quarters, reported the paper. With China lagging, venture capitalists have been setting their signs on India. After all, the country has around 500 million millennials and roughly 150 million small and medium-sized businesses. Liu Genping, a partner at VC firm Vertex, told The Financial Times that in China most of the easy investments have already been made and that the interest in India and Southeast Asia is because of China. “The FinTech cycle started two to three years ago, that’s why today you see it’s still booming,” he told the paper. Venture capitalists and FinTechs say they have taken the lessons learned in China and are applying them in Southeast Asia.

At the same time that interest in FinTechs in China is slumping, Europe is garnering more attention from venture capitalists. The research by CB Insights revealed that FinTechs were able to raise $1.7 billion in Europe during the first quarter with 102 deals inked. The region is drawing interest from global investors who are pouring into FinTechs. The Financial Times pointed to N26, the German bank, as one example. It has a valuation of $2.7 billion after raising $300 million during the first quarter of 2019.

 

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