Capital invested in the first half of 2018 has already reached 85.2% of last year total
- Last year, investment in Singapore-based FinTech companies more than tripled compared to 2016 to reach a record of $983.6m.
- Funding remained strong in H1 2018 with a total of $838.1m invested. A single investment of $575m in Sea Limited, a digital services provider, accounted for 68.6% of the total capital. The convertible notes funding will be used to support business expansion, with a focus on developing the company e-commerce platform, Shopee. Sea also operates the AirPay app which provides e-wallet services to consumers.
- Deal activity is also set to surpass last year total. The 34 deals completed during H1 2018 equates to 66.7% of the 51 transactions closed in 2017.
FinTech investments in Singapore set a new quarterly record in Q2 2018
- Q2 2018 was the strongest funding quarter to date with $718.9m invested. This was due to the previously mentioned $575m investment in Sea Limited.
- The spike in funding in Q2 2017 was the result of another investment in Sea Limited. The company raised $550m in Series E funding from Cathay Financial Holdings, GDP Venture and Hillhouse Capital Group, among others.
- The next largest deal in Q2 2018 was a $60m investment in Carro, an online auto marketplace platform. The Series B round was led by Softbank Ventures Korea and Insignia Venture Partners with co-investment from Golden Gate Ventures and Alpha JWC Ventures, among others.
- Deal activity in Q2 2018 was historically mid-range with 14 deals completed. Compared to the same quarter last year, both deal activity and capital invested remained within range.
Singapore has overtaken Hong Kong as Asia premier FinTech hub
- Singapore and Hong Kong are two of Asia leading financial hubs. Both are well positioned to become global leaders in FinTech based on their strong foundations in traditional financial services.
- In both 2014 and 2015, FinTech companies based in Hong Kong received more capital than their counterparts in Singapore. However, Singapore has since gained the lead; total FinTech funding in the country was 1.6x higher than in Hong Kong during both 2016 and 2017.
- In H1 2018, Singapore-based companies raised $838.1m-worth of funding compared to Hong Kong $70.8m. Singapore takes a simpler regulatory approach to FinTech than Hong Kong which has a multi-layered regulatory structure. As a result, Singapore may be more attractive to FinTech companies trying to avoid the red tape associated with multiple regulators.
- Despite the traditional rivalry between Singapore and Hong Kong, the two cities have recently signed an agreement to strengthen their collaboration on FinTech.
There has been a strong shift towards later-stage deals since 2014
- In 2014, deals valued less than $1m accounted for 75% of all FinTech investments in the region. This decreased by 65.9 percentage points (pp) between 2014 and 2017 to just 9.1%. This share remained low in the first half of 2018 at 8.3%.
- There was an absence of deals valued above $10m in 2014. However, this category share subsequently increased year-on-year; in 2017, a quarter of all deals were larger than $10m. This trend continued in H1 2018 with 45.8% of investments in this range.
- A notable deal in this category was the $30m investment in tryb Group, which acquires and develops middle market FinTech companies. Makara Capital made the private equity investment which will go towards acquiring, developing and scaling up growth stage FinTechs within the SME lending, trade finance and micro-credit sectors.
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