Late-stage deals continue to take greater share of investments in Q1

Over 40% of FinTech deals in Q1 2017 were of deal size greater than $5m as companies in the sector look for increasing amount of capital.

As the FinTech sector matures, successful companies are raising later-stage funding. Last year a record 552 deals above $5m were closed worldwide. This was accompanied by a significant fall in the number of deals under $1m, which decreased by a third compared to 2015’s levels.

  • Last year the share of deals over $5m was higher than for deals under $1m for the first time, with 38.4% and 30.8%, respectively.
  • The share of deals under $1m has been falling consistently in the last three years and in Q1 2017 slumped to 27% – a 16.5% decrease on 2014’s numbers.
  • Deals between $1-$5m were as common as deals up to $1m in 2016.
  • The numbers in the opening quarter of the year reinforce the shift to later-stage deals with deals valued over $5m taking a 43.7% share.

Investor pull back on small deals as the overall number of FinTech deals declined in 2016

  • In 2016 the number of FinTech deals under $1m in Europe and North America fell below  the levels in 2014, despite increases in 2015.
  • In Europe the number of deals above $5m increased by 56.5% between 2014 and 2016. Despite failing to surpass the number of deals closed above $5m in 2015, North America still saw an increase of 12.4% between 2014 and 2016.
  • In 2016 North America closed 2.2 times the number of deals closed in Europe. However, in Q1 2017 this gap fell, as North America only closed 1.7 times the number of deals closed in Europe.

The number of deals over $10m in Asia has nearly tripled in the last three years

  • The number of deals valued above $10m is increasing faster in Asia than in other regions with a CAGR of 41% compared with a CAGR of 5% and 17% in North America and Europe, respectively.
  • Despite a gradual fall in deal share for investments valued $0-$1m between 2014 and 2016, the number of deals in this segment has grown since 2014. Moreover, Q1 2017 saw a significant increase in the deals share in this segment with 34.5% of deals valued at less than a million.

North America had the largest average deal size for funding rounds valued over $25m in Q1 2017

  • Average deal size for funding rounds over $25m in 2016 was almost 3 times larger in Asia than it was in North America
  • Asia has seen an exponential increase in average deal size between 2014 and 2016 with a CAGR of 47%. In comparison North America has seen a gradual decline with a decrease of 14% CAGR between 2014 and 2016.
  • However, the first quarter of the year saw the average size for deals valued above $25m rocket in North America to $210m, while Asia saw a sharp fall by 71.4% to $60m

Despite the fall in the overall number of FinTech deals in 2016, the amount of transactions over $5m still increased with most of the decline attributed to a fall in deals under $1m. 2017 has already seen a large number of large deals closed across the world. The UK’s Atom bank and China’s Xiaoying Financial both closed deals valued well over $100m, in march and in the US, online loans provider, SoFi received $500m in Series F financing from Silver Lake Partners and other investors.

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

Latest Post