Capital invested in global RegTech companies has increased more than nine-fold over the past six years

Global RegTech investment more than doubled between 2017 and 2018

  • Global RegTech investment grew more than nine-fold between 2013 and Q3 2018. An increase of 45.9% CAGR, in terms of capital invested, has seen funding grow from $412.3m in 2013 to $1,867.6m in 2017.
  • Funding doubled between 2014 and 2017, before jumping to $3.75bn in the first three quarters of 2018.
  • Deal activity has remained in an upward trend between 2013 and 2017, with 680 deals completed during the period. Annual deal activity has remained above 120 since 2014, reaching 122 transactions in the first three quarters of 2018, setting strong expectations that deal activity will at least match 2017’s figure.
  • Funding in 2018 was bolstered by large transactions with SenseTime, a facial recognition solution provider, raising over $2.2bn across three deals.

 

Quarterly funding surpassed $1bn for the first time in 2018

 

  • Deal activity has remained above 30 transactions per quarter over the past five quarters, reaching a high of 43 deals in Q2 2018. Investment reached almost $1.9bn during that that three-month period, primarily driven by the previously mentioned $1.2bn of funding that SenSeTime raised.
  • Checkr, a San Francisco-based automated background checking solution provider, raised a $100m Series C round which also boosted funding levels in Q2 2018.
  • Investment in Q3 2017 was above $809m, almost double that of Q4 2017. This was driven by the $410m Series B funding that SenseTime received in July 2017. Investment in Q3 2018 was 78.1% higher than in Q3 2017 as SenseTime raised a further $1bn in a Series D round from SB China Venture Capital in September 2018.

 

The regional shift in RegTech deals from the North America to Europe is continuing to other regions

 

  • There has been a continued shift in the centre of gravity of global RegTech deal activity since 2013. North America has dominated with 493 transactions however, the region has seen its share of total deals drop from 75.3% in 2013 to just over half of the deals in the first three quarters of 2018.
  • Europe has more than doubled its share of deals over the same period from 15.7% to 34.4%, while other regions, notably Asia, have increased their share from 9% in 2013 to 15.6% in 2018.
  • Prior to 2016, the ‘Other’ category was defined purely by Israel, Australasia and Asia, however, South America entered the race, with three transactions completed each year since 2016. New initiatives from regulatory authorities in the Middle East and the rise of RegTech deals in Australia and Brazil have driven deal activity in other parts of the world.
  • Idwall, an Onboarding Verification solution provider based in Sao Paulo, raised a $3m Series A round in Q1 2018. Funding came from Monashees, a Brazilian venture capital firm, and Idwall is planning on tripling its headcount to 120 by the end of 2018.

 

Almost 60% of RegTech deals since 2013 have involved companies based in the US

 

  • US companies have attracted the most investment, with 469 RegTech deals completed between 2013 and Q3 2018, which is equal to 58.6% of total transactions globally during the same period.
  • This is almost quadruple the number of deals completed in the United Kingdom and nearly double the number of transactions completed in the next nine countries in the top ranking combined.
  • The UK follows in second place with 119 deals, which is in line with the size of the country’s financial services industry relative to others. Israel, Canada, Ireland, Switzerland and Australia have all reached double figures in terms of external investment rounds into RegTech companies, underlining the emergence of these countries as centers of RegTech innovation.

 

The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2018 FinTech Global

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