Fintech Funding in Asia Increased 9.1% In Q2 Of 2020

Asia Blockchain Review
August 30, 2020

Total Fintech Funding in Asia Increased 9.1% in Second Quarter as Investments in Southeast Asia and Australia Soared. Fintechs in both regions attracted $824 million in total, approximately 60% of total investments in Asia.

Investments in private financial technology (“fintech”) companies in Asia-Pacific grew 9.1% to $1.4 billion in the second quarter of 2020 when compared with the first quarter, according to the Q2 APAC Fintech Funding Report by S&P Global Market Intelligence. Deal activity remained flat in the region, with 107 transactions recorded in both quarters.

Fintech funding in Asia was predominantly led by Southeast Asia and Australia, with both regions drawing in $455 million and $369 million, roughly three-times and two-times the amount raised in the previous quarter, respectively.

Fintech investments in India declined 38% to $339 million as the government continued to scrutinize and clamp down on foreign investments. Funding in China also fell from $205 million to $41 million as the country saw fresh outbreaks of COVID-19 cases. 

 “Fintech investments in Asia were primarily driven by India in the last quarter, but investors appeared to have shifted their attention to Southeast Asia and Australia,” says Celeste Goh, Fintech Analyst at S&P Global Market Intelligence.

“Outlook for fundraising activities will largely remain the same as growing tension between China and India may continue to drive capital into Southeast Asia in the months ahead. Meanwhile, open banking developments in Australia may continue to spur investors’ interest in digital banks.”

According to CB Insights, there were quite a few highlights as listed below for the global outlook in the ecosystem.

  • Fintech funding rebounds in Q2’20 but deal activity continues to fall. Funding increased 17% quarter-over-quarter (QoQ) to $9.3B in Q2’20. However, monthly deal activity hit a fresh low of 127 deals in April before picking up the pace in June, which saw 141 deals.
  • Fintech mega-rounds ($100M+) hit a new quarterly high of 28 as the largest companies in the space raised additional funding. Mega-rounds have become more common as successful startups are generally staying private longer. However, the recent spate of IPOs and IPO filings may indicate the start of a shift in this trend.
  • Asia was the only continent without a dollar funding rebound in Q2’20. North America, Europe, South America, Africa, and Australia all saw an increase in fintech funding QoQ while funding to Asia-based companies fell 37% to $1.6B. However, deal activity in all regions was either flat or down QoQ.
  • There are 66 VC-backed fintech unicorns worth a combined $248B.
    Q2’20 saw just 1 new fintech unicorn birth (Upgrade).
  • Fintech companies continue to mature, with many ready for the scrutiny of public markets. S-1 filings in Q2’20 included Lemonade, nCino, and Rocket Companies.

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