Early-Stage Funding Declines 56%, While Investment into More-Mature Fintechs Grows 66%
Investment in financial technology (fintech) ventures in Singapore rose sharply in the first nine months of 2019, led by fundraising with payments startups and insurtech firms and a shift toward more-mature companies, according to an Accenture analysis of venture-finance data from CB Insights, Pitchbook and Tracxn.
The total value of fintech deals in the nine months ended Sept. 30 jumped 69% from the prior-year period, to US$735 million* from US$435 million*, and exceeded the US$642 million raised in all of 2018. The number of fintech deals fell by almost one-third (29%) in the first nine months of 2019, to 94 from 133 in the prior-year period showing that investors made larger bets into fewer deals as startups grew their business.
Investments in payments startups and those in lending took the bulk of fintech fundraising, accounting for 34% and 20% of the total, respectively, while insurtechs raked in 17%. The value of payments deals jumped 113%, to US$251 million, making the biggest contribution to the overall gains this year. Insurtech funding nearly quadrupled, to US$128 million from US$35 million, and lending rose more than 50%, to US$145 million.
Angel and seed funding that focuses on the earliest stage of capital raising for startups just getting their business off the ground dropped 56%, to US$54 million, and the number of those deals declined 46%, to 29. Series funding, which typically targets companies looking to grow their business with external capital as they mature, jumped 66%, to US$442 million, although the number of deals was relatively unchanged, at 44, versus 43 in the first nine months of 2018.
“As we’ve seen in other parts of the world, fundraising is shifting to support the scaling up of challenger and collaborative fintech, which will cause lumpiness in some rounds as the market becomes more mature,” said Divyesh Vithlani, a managing director at Accenture and head of Financial Services in the ASEAN region. “This steady flow of funds shows investors’ confidence in the future growth potential of the fintech industry in Singapore. The upcoming unveiling of virtual banking licenses will bring even more opportunities for fintech startups and traditional banks to partner and cooperate.”
Although the number of lending and insurtech deals declined more than 40%, the number of deals with payments startups soared 60%. The pickup in both the value and number of deals for payments startups indicates that investors still see a lot of potential opportunities in that segment, particularly as fintechs and traditional financial firms look for ways to collaborate as Singapore prepares to issue digital banking licenses in the coming months.
“Crossing a billion-Singapore-dollar investment threshold is recognition from investors around the world of the potential of Singapore’s fintech ecosystem and the outlook for digital financial services not just in Singapore, but also in Southeast Asia,“ said Sopnendu Mohanty, chief fintech officer of the Monetary Authority of Singapore. “These comprehensive figures show that fintech investment in Singapore has increased nearly six-fold year-on-year from 2015. It’s encouraging to see the local startups financing their global growth from Singapore. Additionally, several global fintech companies with regional headquarters in Singapore have recently raised sizeable funds to fuel their Asian expansion.”
*The 2019 and 2018 figures included US$47 million and US$12 million respectively in undisclosed venture capital transactions data provided by the Monetary Authority of Singapore.