The WealthTech sector saw $541m-worth of funding across 116 investments in the second quarter of the year
WealthTech saw 166 deals across Q2 2017, which is a record quarter for deal activity in the sector. However, the second quarter was unable to top the $753.5m-worth of funding seen in Q4 of last year. 2017’s second quarter saw WealthTech grow in both overall investment and deal activity when compared with Q1 2017, with a QoQ rise of 26.5% and 78.5%, respectively. The biggest deal in the last quarter was received by Palo Alto-based Robinhood. The retail stock trading firm’s $110m Series C funding round was three-times larger than the second-biggest deal in the period. Robinhood’s investment round was led by DST Global with NEA, Thrive Capital, Ribbit Capital, Index Ventures, and Greenoaks Capital participating as co-investors.
WealthTech deal activity in 2017 is on track to surpass last year’s record levels
- The first half of 2017 has already seen more deals and funding than the whole of 2014. The first two quarters of the year had 181 deals, one extra than 2014’s, and over $30m additional funding.
- H1 2017’s 181 deals is over two-thirds of the total seen in the whole of last year, which was a record year for the sector. If the pace of deal activity carries on in the second half of the year 2017 can set a new high for most WealthTech deals.
- The average deal size for the first half of the year was $5.4m, just above the lowest yearly average in the period of $5.2m seen in 2014. H1 2017’s average is 37.2% lower than last year’s, making this year’s chances of becoming another record-breaking year in terms of funding less likely. The largest WealthTech investment of 2016 was received by Shanghai-based U51.com, in a $310m Series C round. The U51.com deal is almost three-times higher than the single-largest deal of this year so far, meaning at the moment deals have been more frequent than last year, but smaller in size.
Over half of the WealthTech deals in Q2 2017 went to Personal Finance companies
- 50.4% of the WealthTech deals in Q2 2017 were by firms focused on Personal Finance. This percentage is over double the share of the second largest sector for deals – Retail Investing & Trading.
- Personal Finance companies received just under a third of the investment total, an amount equivalent to $173.1m, despite picking up over half of the total deals to the sector. Despite changes in their values, the rankings of each of the subsectors, whether it be either share of deals or funding, remained the same.
- The largest Personal Finance deal of the quarter came in mid-May for Chinese firm Wacai, creator of a personal finance management app that provides both bookkeeping and mutual fund trading services, which received $42.0m in an undisclosed round led by China Development Bank Capital.
Q2 2017 sees Online Banking maintains its status as the WealthTech subsector to have received the largest share of totalfunding in 2017
- Online Banking’s investment share fell 22.1% after the introduction of Q2 2017’s figures, falling to just under 31% after a dominant Q1 saw its share rise to over 50%.
- In the opening half of 2017, Retail Investing & Trading firms had their share of funding rise to nearly a quarter of the overall, after a YoY fall in the 2014-2016 period.
- Personal Finance’s growth YoY during the 2014-2016 period saw the sector’s share of funding almost double, from 20.7% in 2014 to 37.4% in 2016. However, so far in 2017 that value has receded to just above a quarter.
North American WealthTech investment exceeded Europe’s in Q2 2017
- Q2 2017 was a strong quarter for North America-based WealthTech companies. Companies in the region received nearly a quarter of a billion dollars in funding and overtook Europe, after Europe led the way in Q1.
- Continuing from Q1, Asia’s $100.4m total saw it again as the region receiving the lowest investment value. Asia’s meagre $160.1m in WealthTech funding thus far, is almost $25m more than what it received in the same period in 2016, but is a massive decrease in 2016 Q3 and Q4’s figures.
- North America’s largest WealthTech deal of Q2 went to the Retail Investing & Trading firm Robinhood – the largest deal of the quarter.
Durham’s Atom Bank has seen the most funding of any WealthTech company across 2017 so far
- The ten companies to have received the highest amount of funding in 2017 so far have seen $520m in total investment across 12 deals. These ten companies account for 53.6% of the overall WealthTech funding since the start of the year.
- UK-based challenger bank Atom Bank received the most investment of any WealthTech company in the first two quarters of 2017. The firm’s $140m funding was separated across two deals, the first being a venture round valued at $102m led by BBVA in early March, and the second coming in late-June in the form of debt financing courtesy of British Business Bank Investments.
- Europe leads the way with five companies amongst the top ten, followed by North America with four, leaving personal finance company Wacai the solitary Asian representative.
- Fellow UK challenger bank Monzo also features, having received a $27.4m Series C round in February. Other firms to feature include Canadian robo-advisor Wealthsimple – another company to have received funding on multiple occasions this year.
The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies in WealthTech as well as across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2017 FinTech Global