Funding to Institutional Investments and Trading companies look set to fall for a third year running

The first three quarters of 2017 saw only $518.2m of funding to Institutional Investments & Trading companies, 71% of the total investment in 2016.

Total investments in Institutional Investments & Trading companies increased at a CAGR of 40.9% between 2014 and 2016. In 2016 Institutional Investments & Trading Companies received a total of $729.5m, 2.8% less than the total invested in 2015. Investments to the subsector look set to fall further this year as the first three quarters of the year saw $232.8m worth of funding in deals under $100m, only 54.6% of the investment to this segment last year. The number of deals closed to the sub-sector fell by 23% last year and only 69.7% of the total deals closed in 2016 were closed in the first three quarters of this year, putting deal activity on track for another decline.

Investments valued under $100m increased threefold last quarter compared to Q2 2017

  • Investment valued under $100m hit a 5 quarter high in Q3 2016 with $161m committed to Institutional Investments & Trading companies, an increase of 17.4% YoY.
  • Over the last five quarters the number of deals has varied falling from a high of 26 in Q3 2016 to 12 in Q3 2017.
  • The last 5 quarters saw two deals valued over $100m. The investment platform Addepar closed a $140m Series D deal on the 8th of June, followed less than a week later by a $145.5m Series C funding round to Hong Kong based Futu Securities.

The share of deals to US-based Institutional Investments & Trading companies has progressively declined since 2014 as more transactions are closed in emerging markets

  • The share of investments to companies based in the United States fell by 9% between 2014 and 2016 and look set to fall again by the end of this year.
  • Canada and the United Kingdom have both seen the share of deals to Institutional Investments & Trading companies gradually increase between 2014-2016. Notably Canada has received 9% of deals closed in the first three quarters of this year, up from only 1% of deals in 2014. Most recently CoPower, a clean energy investment platform based in Montreal which offers earnings of up to 5% annually, received $2m of venture funding in July.
  • Other countries including but not limited to; Australia, Sweden, Singapore and Israel receive a combined total of around 25%of deals each year.

The Top 10 Investors Participated in a 15.9% of all deals to the subsector between 2014 and Q3 2017

  • Over 300 institutional and angel investors have participated in deals to Institutional Investments and Trading Platforms since 2014. 15.9% of deals to companies in this subsector included participation from the top ten investors, with the most active investor; Startupbootcamp participating in 3.3% of investments.
  • Nine of the top ten investors are based in the United States with the only remaining investor Startupbootcamp based in the UK.
  • Startupbootcamp’s investments include seed rounds to Risk Management Platform Adapt Ready and Trading Platform CFX Markets.

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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