Global PayTech funding down by more than 30% in 2017 as investor appetite declines

Funding to Payments & Remittances companies declined to $5.1 billion across 234 deals in 2017

• The total capital raised globally by PayTech firms fell from $6.2 billion in 2014 to just over $3.8 billion in 2015. This was despite a 23.1% uptick in deal volume from 307 deals to 378 in 2015, hence average deal size dropped from $20.2 million to $10.1 million during the same period.
• PayTech deal activity trended lower, falling from 378 deals in 2015 to 303 in 2016, a 19.8% drop. Concurrently, total PayTech funding almost doubled during this period, primarily driven by the $4.5 billion series B funding to Ant Financial, led by China Investment corporation.
• PayTech funding fell by 30% in 2017 as deal activity continued its decline from 2016 to 234 deals. As the funding environment for PayTech matures, investors are doing larger but less frequent deals.

Global PayTech funding and deal activity declined in H2 2017, after a strong second quarter

• Deal activity between Q4 2016 and Q1 2017 remained almost unchanged dropping from 63 to 61, but funding grew by 52.7% QoQ. This increase in funding levels at the start of 2017 was driven by larger deals such as the $150 million of debt financing raised by Zibby, a New York based alternative payment provider for retail consumers, led by Victory Park Capital.
• Q2 2017 was the strongest quarter for PayTech funding last year, with 81 deals concluded and more than $1.7 billion of capital raised. However, 82% of the funding raised was the result of SoftBank’s $1.4 billion venture investment into Indian mobile marketplace, One97 Communications.
• Deal activity in Q3 2017 slumped by 45.7% with funding dropping to $715.9m. However, the final quarter finished the year off significantly stronger. Deal activity picked up marginally to 48 deals but Q4 funding levels more than doubled to almost $1.5 billion. This resurgence in funding was in part driven by a flow of larger deals including the $197.2 million of debt finance that Dublin based point-of-sale firm, SmartBox, raised from AIB Equity.

North American firms dominate the ten largest global PayTech deals in 2017

• The top ten global PayTech deals raised just under $3.1 billion last year, 61% of the sector’s total funding in 2017. This ratio declined from 79.4% in 2016 when it was elevated by Ant Financial’s $4.5 billion Series B funding.
• North America dominated the largest ten deals in 2017 with 5 companies raising a combined $792 million. Of the $3.1 billion raised in the ten largest deals, 58.1% went to Asian companies. The largest deal of 2017 was SoftBank’s $1.4 billion venture investment to New Delhi based One97 Communications.
• The PayTech funding landscape is maturing with three debt finance deals included in the top 10 deals of 2017. TEMPOE, a point of sale financing provider, raised $150 million in debt funding in Q4.

North America takes top spot for PayTech deal flow in 2017

• Nearly 40% of PayTech deals in 2017 went to North American firms, with US companies claiming 87.8% of deal flow for the region. The largest transaction in North America last year was the $200 million series E funding that point of sale financing provider, Affirm, raised in Q4.
• 4.3% of deals in 2017 took place in Africa and Kenyan firms dominated the continent’s deal activity with five of the region’s ten deals. The biggest deal in Africa was the $4.3 million series A round raised by Kenya’s BitPesa, an online payments platform, led by Greycroft Partners.
• Despite contributing to just 22.2% of deal flow in 2017, Asia dominated PayTech funding with 43.4% of total capital raised in the sector last year. Of the 52 deals that took place in Asia in 2017, 23 (44.2%) of these went to Indian companies.
• Europe trailed North America with 27.7% of the deal activity in 2017, with London attracting 38.5% of the continent’s deal flow. The largest deal in Europe last year was the $280 million series E round that London based TransferWise, a money transfer provider, raised in Q4.

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

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