Quarterly WealthTech investment retreated from a high at the end of last year, but still surpassed the levels of Q1 2016 in both total investment and number of deals.
- Q1 2017 investment figures show positive signs for WealthTech growth, with both total investment and total deals growing 15.3% and 47.7% year-on-year, respectively.
- Q4 2016 was the biggest quarter in the period with $753.5m invested, while Q2 2016 attracted the most deals with 84 transactions.
- The total deals and total funding increased by 47.7% and 24.9% year-on-year, respectively.
- The strong first quarter of the year was driven by a $102m investment into UK-based Atom Bank in early March. The next biggest deal went to deposit marketplace, Raisin, which scooped $32.3m back in January.
Global WealthTech investments nearly doubled last year as interest in the sector continues to grow
- 2016 was a record year for the sector as total investments surpassed the combined capital inflow of the previous two years.
- Despite the total investment nearly doubling from 2015 to 2016, the total deals only grew by 5.8%, which meant the average deal size grew by 68.2%.
- WealthTech investments grew at a CAGR of 53.3% during 2014-2016.
- The top two deals in WealthTech since 2014 both went to China-based companies as credit card management app U51.com raised $310m while Jubaohui, an online financial platform, scooped $200m in a Series A round.
- Other notable deals in the period included a $124m funding to Atom Bank, and a 100$m Series E round to US-based robo-advisor Betterment.
2017 set to be a strong year for Europe after first quarter sees record investment for the region
- Europe attracted the most investment in Q1 2017 with $241.4m. Asia and North America both saw investment fall in the opening quarter of 2017 whereas Europe’s more than doubled in size.
- Asia received the most total funding since the beginning of 2016 with almost $950m worth of investments.
- The largest quarter for any region was Asia’s Q4 of last year, with over $400m investment across 12 deals. The largest of these deals was received by London-based Robo Advisor Nutmeg, in a £30m ($37.7m) Series C round. However, in Q2 2016, North American WealthTech received 37 separate funding rounds, over 80% of the total deals in Asia during the whole of 2016.
Online Banking and Personal Finance drive WealthTech investment growth
- Personal Finance grew consistently year-on-year between 2014 and 2016, increasing its share of funding by 16% across the period.
- Online Banking dominated WealthTech funding in the first quarter of the year, attracting over half of the capital to the sector, fueled by the big rounds to challenger banks such as Raisin and Atom Bank.
- Conversely, investment to Retail Investing & Trading companies has seen its share fall from 39% in 2014 to 12% last year.
- From 2014-Q1 2017, only Online Banking’s sector proportion of overall funding rose. This can be attributed to Atom Bank’s recent funding round.
Conclusion
WealthTech is on the rise. The increasing popularity of new technologies in tandem with more and more people gaining more financial independence globally has resulted in funding for the FinTech sub sector hit record levels in 2016.
For 2017, Europe looks well set to take the reins of a sector in which Asia saw great interest in in 2016. Online Banking is gaining traction in a world with the amount of people having access to financial technologies is increasing by the day. Q2 2017 looks like it could be a very active period indeed for investments inyo WealthTech.
