Global PayTech investment declined in 2017 as investors look for other opportunities

Global funding to PayTech companies declined in Q2 despite an uptick in deal activity

PayTech companies raised $0.2bn in the second quarter of the year across 30 deals which was a slight improvement on the 28 deals in the opening quarter of the year. It was still some way off the 46-deal haul seen in the same quarter of last year, which represents a 34.8% fall in deal activity YoY. Q2 of last year remains the record quarter for total funding with $4.8bn raised. However, it is important to note that figure was mainly due to a Series B round received by ANT Financial, which still holds the first spot for the largest FinTech funding round ever. The round was led by the China Investment Corporation, with co-investment from China Construction Bank, Primavera Capital Group, and China Development Industrial Bank (CDIB). Q3 of last year was PayTech’s most active quarter in the period, and the quarter with the highest total investment if one was to exclude the ANT Financial round from the analysis.

PayTech deal activity looks set to decline again as the opening half of 2017 receives only 58 investments

  • 58 funding rounds took place in the PayTech space in H1 2017, only a third of 2016’s total, setting the sector’s deal activity on track to continue its YoY decline; there was a fall in deal activity of 26.3% from 2015 to 2016.
  • Excluding the enormous ANT Financial Series B round, global PayTech funding fell by 11.8% last year compared to 2015.
  • 2015 remains a record year for global investments into PayTech with 232 deals.
  • PayTech’s decline has meant growth for other FinTech sectors as investors look for other opportunities and most notably WealthTech, after its record quarterly investment activity across the second quarter of 2017 in a previous research piece produced by FinTech Global.

Freecharge’s $57.2m funding round was the largest PayTech investment of H1 2017

  • Indian Mobile Payments company FreeCharge tops the PayTech deals size ranking after the close of the second quarter of 2017. The Mumbai-based firm’s $57.2m Series D round came back in January and was the only PayTech deal to surpass $50m in the period. The round was led by New Delhi-based e-commerce firm Snapdeal.
  • The ten largest PayTech deals in the first half of the year collected $337.8m between them, attributing to over 85% of the overall PayTech funding in the period.
  • The previously mentioned FreeCharge are joined by fellow Asian FinTech companies Viva Republica and Paytm in the top ten. A duo of US-based companies features on the list: LevelUp, which specialises in Mobile Payments, and Verse, which provides P2P payment services. European and Australian companies complete the top ten.

North America-based companies saw their share of global PayTech deals cut in half since 2014

  • It seems investors are taking increased interest in PayTech solutions based in emerging economies like Africa and South America. There is apparent YoY growth in deal share for the ‘Other’ regions in the 2014-2016 period, as well as in the opening half of this year. In the last three and a half years the share of PayTech deals going to less financially developed regions rose by more than 10%.
  • During the 2014-2016 period, the total deals being received by North American PayTech companies fell continuously YoY, falling from what was 103 deals in 2014 to 71 at the close of last year. This was heightened in the opening half of this year in which deal share continued to fall, this time to 25.9%.
  • H1 2017 shows North America’s decline, with the close of this years second quarter showing both Europe and Asia to be near-equal with the amount of North American investments so far. Europe and Asia have seen 16 and 15 deals each, respectively, in the opening half of the year, while North America is only marginally ahead with 19.

500 Startups leads the way for investors in the PayTech space having made 12 investments since 2014

  • VC and accelerator 500 Startups made 12 investments into the PayTech space since 2014. The Mountain View-based investor funded PayTech companies more frequently than any other investor since the start of 2014.
  • Six of the top ten investors have headquarters in the US. London duo Entrée Capital and Startupbootcamp, along with Dublin’s Mastercard Start Path feature prominently. Tel Aviv-based 83North is the sole non-US or European investor in the top ten, having made seven investments.
  • Investments featuring one or more of the top ten amounted to 85 in total during the period – 12.9% of the funding rounds in the PayTech space since the start of 2014. This was despite the top ten investors accounting for only 0.01% of the 808 individual investors in the period.

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. ©2017 FinTech Global

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