Global WealthTech investment increased nearly 5x since 2014

Total amount invested in WealthTech companies surpassed $4.5bn last year

  • Capital raised by WealthTech companies reached $4.6bn across 220 deals in 2018. This was an increase of 65.9% from the previous year.  There were 27 transactions valued at $50m or above which collectively raised $2.7bn, as opposed to only 13 deals in this bracket in 2017 which raised approximately half of this amount.
  • The biggest deal last year was Robinhood’s $363m Series D round. The Menlo Park-based startup offers commission-free trading for stocks, ETFs, options and cryptocurrencies all available in one platform. The funding round in March last year was led by DST Global, a venture capital firm specialising in late stage investments. Venture capital firms Kleiner Perkins, Sequoia Capital, CapitalG and investment firm ICONIQ Capital also participated.  Robinhood plans to use the capital injection to expand product line-up.
  • The second largest funding round in 2018 was $250m raised by Revolut in a Series C round. The London-based challenger bank, which was valued at £300m in 2017, reached unicorn status with the funding round valuing the company at £1.2bn. Currently, the neobank has more than two million customers globally and said in a press release last year that it is signing up between 6,000 and 9,000 new users each day.
  • Deal activity in the WealthTech sector, which peaked in 2016 with 281 deals, has declined 21.7% since then to 220 deals last year.

WealthTech investment slowed down in the second half of 2018

 

 

  • More than half a billion was raised across 44 deals in the last quarter of 2018. Although, this quarter was the weakest of the year in terms of value invested and deal activity, the total amount raised was a 22.1% increase compared with Q4 2017.
  • The largest deal in this quarter was Monzo’s £85m ($108.5m) Series E round, which took place in October last year. The London-based neobank raised a further £20m ($25.5m) in equity crowdfunding in December. Over the last four years Monzo has completed 10 transactions which have collectively raised £211.7m ($273.9m)
  • The strongest quarter of 2018 was Q1 with $1.9bn raised across 63 deals. Four out of the five largest deals in 2018 were completed in this quarter. Collectively, these four deals raised $855.4m, which constituted 44.0% of the total value invested in the first three months of the year.
  • Deal activity was highest in the first two quarters of the year. The 128 WealthTech transactions completed in H1, made up 58.2% of total deal activity in 2018.

The share of WealthTech deals in North America has decreased by nearly a quarter since 2014

  • Companies in North America attracted a smaller share of transactions every year from 2014 to 2017, going from 54.8% to 38.0% during this period. Although, this share increased slightly, by 3.4 percentage points (pp) last year, it is clear that the US is loosening its hold on the global WealthTech market as FinTech hubs start to form in other regions around the world. Additionally, apart from the previously mentioned Robinhood deal, none of the top 10 WealthTech transactions in the last five years were raised by companies based in North America.
  • Each of the other three regions, Europe, Asia and Rest of World, have increased their share of deal activity since 2014. Companies based in Europe attracted 38.3% of the total deals in 2017, the highest deal share of any region that year. In every other year since 2014 the share of deals in Europe has been second only to North America.
  • Companies in Rest of World attracted 8.2% of total deals last year, a 2.3 pp increase since 2014. Out of all the WealthTech transactions completed in Rest of World across the last five years, 47.3% were raised by startups based in Australasia and 32.4% were raised by South America-based companies. Additionally, one of the top 10 deals globally since 2014 was completed by a company based in that region. Sao Paulo-based challenger bank Nubank raised $150m in a Series E round in March last year. The funding round was led by the previously mentioned DST Global and CEO David Velez said the new capital would “serve to further strengthen our balance sheet to support the accelerated growth we have seen since launch.“

Companies in the Personal Finance subsector have attracted over 40% of deals since 2014

  • Personal Finance was the strongest subsector in WealthTech taking 44.3% of total deal activity over the last five years. The largest deal in this subsector was u51.com’s $310m Series C round in 2016. The China-based company, which offers bill management solutions, has raised $459m across five funding rounds since 2012.
  • Companies in the second largest subsector, Retail Investing & Trading, were responsible for almost one in five of all WealthTech deals. The largest deal in this subsector in 2018 was the previously mentioned Robinhood deal. The second biggest deal was Snowball’s $120m Series D round. The Beijing-based company, which offers a social network and information portal for investors in China, plans to use the latest capital injection for product development. FinTech conglomerate, Ant Financial, was the sole investor in this round.
  • The third most active subsector was Online Banking, attracting 15.6% of deals since 2014. Additionally, seven of the top ten WealthTech transactions completed in the last five years were in the Online Banking subsector. Three of these were raised by challenger banks based in the UK. Revolut, Atom Bank and Monzo have completed funding rounds valued at $250.0m, $207.1m and $108.5m, respectively, since 2014.

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. ©2019 FinTech Global

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