Funding to venture capital-backed financial technology companies in India surged 113.7 percent sequentially in the April to June quarter, despite a drop in the dollar of investments and a global slowdown.
Indian fintech startups saw funding increase for the second straight quarter in 2016 to $156 million from $73 million in the previous quarter, according to a joint report published by consultancy major KPMG Enterprises and venture capital and CB Insights said.
The investment activity was however, lower than the all-time high of $836 million in the third quarter last year as the dollar of investments declined. This was mainly due to the lack of mega rounds, which are funding rounds of $100 million or more, the report added.
At 15, the number of deals remained consistent with 2015 levels, and investment was largely focused on areas like mobile payments and wallets, Neha Punater, Partner and Head of Fintech, KPMG India said in the report.
While the total dollar of investment has declined due to absence of mega-rounds this year, the number of deals remains consistent with 2015 levels. We continue to see investment in key areas such as payments and mobile wallet as well as increased momentum in emerging areas like robo advisory.Neha Punter, Partner and Head-Fintech, KPMG India
Mobile wallet player Mobikwik led fintech financing in India this quarter, raising $50 million in its third round. It was the 20th most d venture capital-backed fintech deal in the world this year.
The other big deals in India include $32 million raised by Lendingkart and $25 million by Capital Float. Bengaluru and Mumbai bagged the top deals as lending companies involved in small and medium scale enterprises and peer-to-peer space attracted the bulk of the investments, the report stated.
Global Funding Squeeze
Globally, funding to VC-backed fintech companies in the second quarter dried up by 49 percent to $2.5 billion from $4.9 billion in the previous quarter. Deal activity declined 12 percent sequentially to 195 deals. Corporate participation in VC-backed fintech deals rose to a 5-quarter high to hit 32 percent versus 23 percent in the second quarter of 2015.
In North America, deal activity fell 25 percent to a five-quarter low to 97 deals from 130 deals in the quarter before. As a result, funding decreased 26 percent to $1.3 billion from $1.8 billion. It was primarily affected by the lack of unicorns – startups d over $1 billion.
Investments in European VC-backed fintech startups rose 22 percent to $369 million from $303 million quarter-on-quarter. The number of deals dropped slightly to 43 from 44 in the previous quarter. The continent saw no mega rounds of funding in the second quarter.
Meanwhile, Asian VC-backed fintech companies raised $772 million, declining 69 percent from $2.6 billion in the previous quarter. This was mainly due to two mega-rounds in China during the first quarter of 2016, one of which was the $4.5 billion funding of Alibaba’s Ant Financial Services. However, deal activity in the continent touched a five quarter high with 46 deals. Early stage VC-backed fintech companies took centrestage accounting for 61 percent of the deals.
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