Global funding to PayTech companies declined in Q2 despite an uptick in deal activity
- $4.8bn was invested into the PayTech subsectors of FinTech in Q2 2016 a record quarter for investment in the sector.
- In terms of deal activity, Q2 2017 30 deal count was a slight improvement on the opening quarter of the year, which received 28 deals. It was still some way off the 46-deal haul seen in the same quarter of last year, the 16-deal reduction represents a 34.8% fall in deal activity YoY.
- Q2 2016 total was entirely due to a Series B round received by ANT Financial, a funding round that was, and still is, the largest funding round in the history of FinTech. 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 2016 was PayTech 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 total making it likely that PayTech deal activity is going to continue its YoY fall; 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 also fell along with deal activity in 2016 (albeit marginally compared with the fall in deal activity) by 11.8%.
- 2015 was a record year for global investments into PayTech with 232 deals.
- PayTech decline has meant growth for other FinTech sectors, most notably WealthTech, was seen to have had record quarterly investment activity across the second quarter of 2017 in a previous research piece produced by FinTech Global.
Freecharge $57.2m funding round was the largest PayTech investment of H1 2017
- Indian Mobile Payments company FreeCharge tops the PayTech investment pile after the close of the second quarter of 2017. The mumbai-based firm $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 10 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 10. A duo of US-based companies features on the list: LevelUp, who specialise in Mobile Payments, and Verse, who provide P2P payment services in the top 10. European and Australian companies complete the top 10.
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 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 10 investors have headquarters in the US. London duo Entr?e Capital and Startupbootcamp, along with Dublin Mastercard Start Path feature prominently. Tel Aviv-based 83North is the sole non-US or European investor in the top 10 having made seven investments.
- Investments featuring one or more of the top 10 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 10 investors accounting for only 0.01% of the 808 individual investors in the period.