Asia's fintech VC funds hit $2.6B in 1Q

Fuelled by "mega-rounds", funds for venture capital-backed fintech companies climbed dramatically in first-quarter 2016 from just US$500 million in the previous quarter.
Written by Eileen Yu, Senior Contributing Editor

Funds raised by venture capital-backed fintech companies in Asia climbed to US$2.6 billion in the first quarter of 2016, up from just US$500 million in the previous quarter.

This significant increase was fuelled by a couple "mega" funding rounds, comprising at least US$1 billion, that went to China's JD Finance and Lu.com, according to a report jointly released by KPMG International and CB Insights.

The Chinese market contributed US$2.4 billion of the region's fintech funding as well as 49 percent of the world's total. Across the globe, investments in private fintech companies reached US$5.7 billion in the first quarter. This included US$4.9 billion, which went to VC-backed fintech companies across 218 deals, the report stated, representing a 96 percent increase over the same quarter in 2015.

In the first quarter this year, there were 13 deals worth at least US$50 million each round went to VC-backed fintech companies, up from 10 deals in the previous quarter.

Lyon Poh, head of digital and innovation for KPMG in Singapore, said the Asian market saw various activities amid the local government's push for financial institutions to adopt innovative technology.

"For example, many insurers are building innovation centres and programmes to rapidly identify and adopt fintech solutions to bring innovation back into their core businesses," Poh said. "This has in turn encouraged more fintech startups to come to Singapore and use it as a base for developing their propositions, and for fund raising."

The Monetary Authority of Singapore (MAS) in June 2015 announced plans to set aside S$225 million (US$160.6 million) over five years to support the local fintech ecosystem. Called the Financial Sector Technology & Innovation (FSTI) scheme, the funds could be used to support innovation centres such as the setting up of R&D labs in Singapore, as well as institution-level and industry-wide projects.

Warren Mead, global fintech co-leader of Fintech for KPMG International, added: "Investors are putting money into fintech companies all over the world--from the traditional strongholds of China, the US and the UK, to up and coming fintech hubs like Singapore, Australia, and Ireland."

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