KPMG says backing for US-based fintechs surged in H1 2018
The first six months of 2018 saw a surge in investment in fintech startups in the US, as investors hope to find the financial industry’s ‘golden egg’.
A study by KPMG found that investment increased to $14.2 billion across 427 deals and in the second quarter reached a record $8 billion.
These deals included more than 10 mega deals with investment of U$100 million or more, including insurtechs Oscar and Lemonade, and blockchain-based consortia company R3.
"Unlike the broader VC market, early-stage fintech companies have continued to attract a solid flow of capital in the U.S., with the several top deals in Q2 going to seed or early stage companies," said Brian Hughes, U.S. National Co-Lead Partner, Venture Capital Practice, KPMG LLP. "At the same time, those able to attract later-stage funding likely reflects investor confidence in their ability to become market leaders, if they aren't already."
Blockchain doubles investment
Investment in blockchain-related firms has seen particular growth in the first half of 2018 with US firms seeing investment double.
“Blockchain has the potential to transform banking services. If banking systems were to be rewritten today they would be based on blockchain," said Hughes.
Strong exits were reported for fintechs in the lending and payments sectors.
Banks invest in fintech
Traditional financial institutions are investing in their own technology infrastructure including a JP Morgan digital bank pilot which it now plans to rollout nationally, Citibank’s digital bank announcement, and an expansion of Goldman Sachs’ Marcus Initiative to the UK.
Trends to watch
Blockchain, regtech and insurtech are all expected to gain momentum, even as artificial intelligence and robotic process automation continue to drive cross sector-opportunities. There will likely continue to be an emphasis on partnering with retailers and aggressive tech leaders globally.
