1
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Global analysis of
investment in fintech
27 April 2017
2
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Welcome to the Q1’17 edition of KPMG International’s Pulse of
Fintech report, in which we explore global trends and deal activity
within fintech.
Globally, fintech investment held relatively steady as the market
undertook a reset following a year of uncertainty across
North America, Europe and Asia. Mergers and acquisitions (M&A)
remained low following a major drop off in Q4’16, while venture
capital (VC) funding to fintech took a small dip quarter over quarter.
Meanwhile, private equity (PE) investment and deal activity rose
slightly.
Corporate investors continued to drive fintech investment, with banks,
insurance companies and other financial institutions recognizing the
need to innovate and making investments accordingly. This quarter,
corporates moved beyond traditional direct VC fintech investment
and looked towards building partnerships and alliances with fintech
companies in order to achieve their objectives.
On a regional basis, both the US and Europe started off the year with
upticks in fintech investment and deal activity — with Europe in
particular experiencing the highest level of investment in years. Asia,
meanwhile, saw fintech investment drop, as the lack of mega-deals
continued, and China introduced new fintech regulations that may
take some time for fintech companies and investors to digest. The
rapid expansion of Asia’s fintech ecosystem across jurisdictions and
strong ongoing interest in fintech in the region, suggest this decline
may be short-lived.
Within fintech, payments and lending continued to dominate deals in
most jurisdictions, although artificial intelligence (AI), the Internet of
Things (IoT), big data, regulatory technology (regtech) and insurance
technology (insurtech) are quickly growing on the radar of investors.
We examine these results and other trends in this quarter’s report.
We also explore a number of questions permeating the fintech
market today, including:
― While Q1’17 was quiet, is the tide about to turn for fintech
investment?
― How is the revised Payment Services Directive (PSD2) driving
fintech activity in Europe?
― What is driving the proliferation of fintech hubs globally?
― Is regtech ready to come into the investor spotlight?
We hope you find this quarter’s edition of the Pulse of Fintech
insightful. If you would like to discuss any of the information
contained in this report, contact a KPMG advisor in your area.
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
Dennis Fortnum
Global Chairman,
KPMG Enterprise,
KPMG International
Ian Pollari
Global Co-Leader of Fintech,
KPMG International and
Partner,
KPMG Australia
Warren Mead
Global Co-Leader of Fintech,
KPMG International and
Partner,
KPMG in the UK
Brian Hughes
Co-Leader,
KPMG Enterprise Innovative
Startups Network, Partner,
KPMG in the US
Arik Speier
Co-Leader,
KPMG Enterprise Innovative
Startups Network, Partner,
KPMG in Israel
KPMG is a global network of
professional firms providing Audit,
Tax and Advisory services. We
operate in 152 countries and have
189,000 people working in
member firms around the world.
The independent member firms of
the KPMG network are affiliated
with KPMG International
Cooperative (“KPMG
International”), a Swiss entity.
Each KPMG firm is a legally
distinct and separate entity and
describes itself as such.
4
Summary
5
Global
Americas
20
29
US
39
Europe
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
51
Asia
3
#FINTECH
4
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Note: This report covers all mergers and acquisitions, private equity investment types and rounds to VC-
backed companies, delineated appropriately. Mega-deals to VC-backed companies from hedge funds or
mutual funds are included. All data is sourced from PitchBook. Page 67 details the methodology and
definitions used.
After a year marked by blockbuster
deals, 2017 starts off modestly:
Combining venture and M&A
investment, fintech deal value in
Q1’17 hit $3.2 billion, not a steep
drop from the $4.15 billion
registered in Q4’16, but a far cry
from earlier outlier quarters.
Transaction volume steadies:
Overall, first-quarter M&A and
venture activity stayed at a new
subdued level observed over the
past 3 quarters, with the first
quarter seeing 260 deals closed in
the fintech space.
VC returns to 2014 levels: In terms
of volume, venture financing is
now seeming to oscillate around
early 2014 or full-year 2013 levels,
having fallen from the peaks of
2015. VC investment, however,
remains on the historically high
end at $2.3 billion.
Corporate participation remains at
elevated level of volume: Having
steadily grown throughout 2014,
with a few quarterly spikes since,
activities of corporations and
corporate venture arms continue to
participate in VC financing at an
elevated level on a historical basis,
with 39 completed rounds reaching
$1.2 billion in VC invested in Q1.
Late-stage financings decline: After a peak of
$16.8 million in 2016, the average VC
transaction size dropped in Q1’17 to $11.8
million. However, the median hit a new high of
$3.8 million in the same timeframe.
Valuations decline at the late-stage: Owing to
timing, the median VC post-valuation dropped
from $151.3 million in full-year 2016 to $41.5
million in the first quarter of the year. Signifying
the temporality of that trend, early-stage VC
valuations rose even higher to $41.0 million for
the same period.
US VC financing sees uptick: Deal flow
slumped to a subdued level throughout 2016
in the US, yet Q1’17 saw a slight increase,
primarily driven by a doubling of late-stage
venture rounds.
Europe sees boom in quarterly VC invested:
Fintech venture activity in Europe has fluctuated
at a historically higher level for several quarters
now, yet thanks to several huge rounds,
Q1’17’s total of capital invested soared to $610
million, the highest tally in years.
Mega-Deals drive Fintech investment in Asia:
With several hotspots for fintech yet still being
an emerging ecosystem when it comes to
venture capital, the Asia-Pacific region sees
considerable fluctuation on a quarterly basis in
deal volume. Yet mega-deals will still occur
and boost overall investment value, whether
they are strategic investments or corporations’
establishment of new divisions that attract
significant fundings.
U$
All currency amounts are in USD, unless otherwise specified, data provided by PitchBook.
5
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
In Q1’17, global
investment in fintech
companies hit
across
260 deals
11
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Global M&A activity in fintech
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
2015 and 2016 saw such massive sums for overall fintech M&A value that a reversion to the mean, presaged
by a downturn in M&A volume first, was likely. Thus, even as M&A activity chugs along at a subdued level,
with a mild quarter-over-quarter uptick, another low quarter for M&A value is not entirely unexpected.
0
10
20
30
40
50
60
70
80
90
100
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010
2011
2012
2013
2014
2015
2016
2017
Deal value ($B)
# of deals closed
12
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Global median venture financing size ($M) by stage in fintech
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017)
April 27, 2017.
$0.5
$0.5
$0.5
$0.5
$0.7
$1.0
$1.0
$1.4
$3.0
$3.1
$2.6
$3.0
$4.0
$5.0
$5.3
$5.9
$7.3
$8.7
$8.3
$11.3
$16.0
$20.5
$15.0
$10.0
2010
2011
2012
2013
2014
2015
2016
2017*
Angel/seed
Early stage VC
Later stage VC
$4.3
$5.1
$5.1
$4.0
$4.8
$6.9
$8.0
$6.9
$11.3
$15.5
$13.0
$16.6
$20.2
$31.0
$33.1
$41.0
$52.3
$57.5
$82.0
$103.1
$202.8
$218.3
$151.3
2010
2011
2012
2013
2014
2015
2016
2017*
Angel/Seed
Early VC
Later VC
Global median post-money valuation ($M) by stage in fintech
2010 — Q1’17
13
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services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Global venture activity in fintech with corporate venture participation
2013 — Q1’17
Corporate venture
investors often have more
incentives to stay active
than the typical VC. In light
of how elevated their
participation in overall VC
financing activity remains,
it’s clear that corporates’
customary incentives of
staying abreast of
innovation while also
positioning for potential
acquisition or partnerships
down the road remain
intact. VC invested totals
often remain robust as well
given certain corporations’
penchant for participating
in larger late-stage
financings, particularly in
Asia.
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
“There has been a lot of experimentation and prototypes in blockchain, but the moment has
arrived where movement to production and transformation requires critical analysis on a solid
fact base that generates business confidence in the validity of production systems development,
transformation and it’s commercial benefits. With this confidence, blockchain proponents will
have the necessary business sponsorship to unlock the promise of blockchain.”
Eamonn Maguire
Global Head of Digital Ledger Services, KPMG International, Managing Director,
KPMG in the US
0%
5%
10%
15%
20%
25%
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2013
2014
2015
2016
2017
Capital invested ($B)
% of total deal count
14
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services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Global venture-backed exit activity in fintech
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
Prior to late 2014, such low exit tallies for venture-backed portfolios primarily made sense given the relatively
youthful nature of fintech in general. Now, exit volume still oscillates at a healthier level, even if the small
numbers involved on a quarterly basis expose the impact outsized, exits can have on total exit value.
0
5
10
15
20
25
30
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010
2011
2012
2013
2014
2015
2016
2017
Exit value ($B)
Exit count
“We know there’s a lot of dry powder in the market and that valuations have adjusted. We know
that VCs worked through their portfolios in 2016. With the new US administration coming into place,
Q1’17 was less about the past and more about resetting the market for the future. Notwithstanding
the slow start to the year, we remain broadly positive on the outlook for fintech investment.”
Brian Hughes
Co-Leader, KPMG Enterprise Innovative Startups Network, and National Co-Lead
Partner, KPMG Venture Capital Practice,
KPMG in the US
15
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Global venture-backed exit activity by type (#) in fintech
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook , *a s of 3/31/2017)
April 27, 2017.
Global venture-backed exit activity by type ($B) in fintech
2010 — Q1’17
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011
2012
2013
2014
2015
2016
2017*
IPO
Buyout
Strategic
Acquisition
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010
2011
2012
2013
2014
2015
2016
2017*
IPO
Buyout
Strategic
Acquisition
16
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Global venture investment in insurtech companies
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017)
April 27, 2017.
After a steady march upward in both venture investment volume and value, to crest at 175 financings and
$1.7 billion in value last year, 2017 is off to a slower start indicating more the effects of timing than any
seismic shift in the insurtech space at large.
“The definition of insurtech appears to have broadened rather than deepened in Q1’17. This
suggests more startups are getting involved in the insurtech ecosystem because of the
opportunities inherent in the sector. To be successful, these fintechs will need to develop their
value propositions much further. It’s not enough to simply know change is needed. Solutions
must also show why they are the best choice for change.”
$188
$219
$332
$367
$1,009
$1,131
$1,726
$243
43
71
92
105
144
160
175
46
2010
2011
2012
2013
2014
2015
2016
2017*
Capital invested ($M)
# of deals closed
Murray Raisbeck
Partner, Insurance,
KPMG in the UK
17
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services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Since 2016, regulatory technology (regtech) has become a hot subsector in nearly every major region
worldwide. 2016 saw over $994 million in global VC investment across 91 deals. This was a steep
increase from 2015’s $582 million and totals continue to rise. Q1’17 saw more than $219 million invested
across 26 deals and signs point toward strong continued investment throughout the year.
Responding to increased regulatory requirements
Over the past 8 years, considerable increases in regulatory requirements for financial institutions and
insurers and their associated costs appear to have forced the industry to respond. Though software has
long been used to address regulatory requirements, increased regulatory complexity and reporting, as
well as an ever-changing regulatory environment, requires more sophisticated and digitized products.
Regtech startups are rushing to fill this demand.
Regtech solutions are being used not only to transform labor-intensive manual compliance processes
through automation, but also to contain risk and reduce costs through the effective processing of large
volumes of data. Startup growth and investor interest is being seen in regtech solutions at all levels of
complexity, from basic and enhanced process automation through to full cognitive technologies and AI.
Regtech solutions driving business agility and growth
Though cost containment and regulatory compliance remain significant industry drivers, organizations
are also waking to the opportunities for business transformation provided by agile regtech solutions.
Such implications become increasingly important as financial services organizations turn their attention
back to strategic growth initiatives and new product development, as well as widening regtech’s target
market to include insurers, challenger banks and other regulated industries.
Regtech is particularly well-positioned to contribute to the productivity agenda by helping to structure and
draw meaningful, actionable information from large volumes of data. Once integrated into business
processes, advanced regtech solutions can provide the capability to deliver against a broader remit, such
as delivering a better customer experience, more robust consumer protections, improved transaction
monitoring and real-time fraud detection.
Global relevance with local hotspots
Regtech startups in the US and the UK are taking an early lead in the industry due to the regulatory
pressures in local markets, as well as alignment with broader industry drivers. While much regtech
startup and VC activity is centered in these areas, activity continues to increase in other locations around
the globe. Regulators in areas like Singapore and Australia have been working to encourage regtechs
through use of regulatory sandboxes and targeted funding opportunities for regtech startups.
Regtech trends for 2017 and beyond
Regtech is an area poised for significant growth in the coming years and VC interest and investment is
expected to continue to increase. In the short term, more organizations will likely be looking to take
advantage of low-hanging fruit around digital labor automation, increasing process efficiency and
reducing cost for regulatory compliance and much immediate activity is expected to be centered on these
areas.
However, the more significant industry impacts and larger investments are expected to come from
implementation of technologies such as blockchain, AI, big data and cognitive. Regtech startups and
solutions that have the potential to impact the customer experience, such as predictive analytics, are
particularly well-positioned for future growth as organizations look to use agile technology solutions to
achieve greater competitive differentiation and drive the growth agenda.
18
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Global venture investment in regtech companies
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017)
April 27, 2017.
$275
$326
$255
$251
$550
$583
$994
$219
48
52
62
85
106
104
91
26
2010
2011
2012
2013
2014
2015
2016
2017*
Deal value ($M)
# of deals closed
“Increased complexity and the pace of regulatory change have led to the rise of regtech startups in
the US and around the globe. Regtechs are collaborating with all types of financial institutions to
enable them to accelerate data processing and reduce regulatory risk more cost effectively than
ever before.”
John Ivanoski
Global Head of Regtech,
KPMG in the US
19
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services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
10
7
6
3
8
5
4
9
2
1
SoFi — $453M, San Francisco
Lending
Series G
DirectCash Payments — $310.7M, Calgary
Payments/transactions
M&A
Paytm E-Commerce — $200M, Mumbai
Payments/transactions
Early stage VC
iZettle — $175.2M, Stockholm
Payments/transactions
Series D
UniRush — $147M, Cincinnati
Payments/transactions
M&A
7
8
6
9
10
5
4
3
2
1
Funding Circle — $101.1M, London
Lending
Series F
Zenbanx — $100M, Claymont
Personal finance
M&A
TechProcess Payment Services — $85.8M,
Mumbai
Payments/transactions
M&A
ProducePay — $77M, Los Angeles
Lending
Early stage VC
Yongqianbao — $68M, Beijing
Lending
Series C
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
20
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
In Q1’17, fintech
investment in the
Americas hit
across
133 deals
21
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
In Q1’17, total fintech investment in the Americas remained strong, with $1.8 billion invested across
133 deals. In line with previous trends, fintech deals activity in the Americas was driven by the US, although
interest in fintech rose in other jurisdictions — particularly in Canada, which has been growing a number of
fintech hubs.
Partnering grows across Americas
Across the Americas, interest in fintech continues to expand beyond direct VC investment and the
development of incubators and accelerators. Both traditional financial institutions and fintech companies
showed interest in partnering models. A partnering model is a win-win for both parties when done well, with
traditional corporates gaining assistance with expanding and enhancing their products and services and
fintechs gaining access to customers and data on a much broader scale than what most could manage
independently. In some jurisdictions, partnering models also included universities and governments in order to
foster high-value innovation.
Corporate VC participation slides in Q1’17, investment remains strong
Over the past year, corporate participation in fintech-specific VC deals has been significant in the Americas,
with averages above 20% for the past three quarters. But in Q1’17, corporate VC participation dropped
to15.2%. Despite decreased participation in fintech deal activity, total corporate VC investment reflected the
third strongest quarter ever.
Canada’s fintech sector continues to evolve and grow
Fintech interest in Canada continued to increase in Q1’17, with the federal government reaffirming its
commitment to innovation in the country’s 2017 budget. At the provincial level, Ontario introduced a regulatory
sandbox for fintech — although the sandbox is under the purview of the Ontario Securities Commission, the
organization responsible for regulating public companies, making it somewhat limited in scope.
Within Canada, interest in blockchain seems to have remained stronger than ever and robo-advisory also
gained traction. During Q1’17, Bank of Montreal introduced a robo-advisory service, making it the first big
Canadian bank to do so. Looking ahead, investment in fintech is likely to grow in Canada, particularly around
AI and machine learning.
Interest in Brazil growing as optimism takes hold
Brazil saw very little investment in fintech this quarter after a very strong Q4’16. However, while Brazil’s
economy took a hit in recent years, there are signs that the country may have reached a turning point —
including falling interest rates. Investors appear to be showing optimism, with some voicing plans to invest in
the turnaround. Fintech interest in Brazil is unique compared to the rest of the Americas, with less focus on
customers and more on increasing efficiencies in the value chain of financial services. Should Brazil’s
economy continue to improve, fintech will likely gain more space on investors’ radars.
Mexico-based fintech focused on unbanked and underbanked
VC investment in Mexico was weak in Q1’17 as US investment into the country seems to have dried up amid
uncertainties around the new US administration’s potential changes to trade policies. Over the quarter, fintech
interest in Mexico continued to be driven by the needs of the unbanked and underbanked, with a focus on four
key areas: payments, international transfers, mobile wallets and P2P lending. Some banks have recognized that
fintechs can help move them forward more rapidly than internal innovation. These banks are working with fintechs
to modernize services and operations in order to reduce costs — for example, introducing auto-banks with
screen-based services supplemented by a connection to bank staff via telephones. With the cost of investment in
Mexico quite low compared to the US, further fintech investments are likely over the next few quarters.
Trends to watch in the Americas
Investor interest is expected to continue to grow across the Americas — with an ongoing focus on the
underbanked and unbanked in much of Mexico and Latin America and on activities like regtech, AI and
machine learning in the more mature jurisdictions.
22
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech VC, PE and M&A activity in the Americas
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017) April
27, 2017.
After 3 very active years, overall investment within the fintech space is on a slower pace, returning more
toward pre-2014 levels in both value and volume. Timing certainly played a factor in Q1’17’s more sedate
pace, as well as the coincident booms in both M&A and venture deal making that have since somewhat
subsided.
$4.7
$8.7
$4.1
$9.3
$15.7
$37.7
$14.9
$1.8
214
309
395
521
679
752
615
133
2010
2011
2012
2013
2014
2015
2016
2017*
Deal value ($B)
# of closed deals
“Q1’17 may have been quiet for fintech investment in Mexico, but interest is still evident. The
country continues to be a great place to invest because the cost of investment compared to the US
and elsewhere isn’t as steep. It is much lower risk, but the potential for reward is high — particularly
for companies that can attract Mexico and Latin America’s large unbanked and underbanked
populations.”
Francisco Lopez
Advisory Leader, Financial Services,
KPMG in Mexico
23
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Venture investment in fintech companies in the Americas
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
Primarily due to SoFi’s outlier financing in the first quarter, VC invested was more than robust to start off
2017, although overall financing volume was also fairly healthy. Within the broader context of the venture
industry being impacted by sliding angel/seed funding activity, the downturn in fintech is not much different,
as late-stage deal volume actually rose quarter-over-quarter.
0
20
40
60
80
100
120
140
160
180
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010
2011
2012
2013
2014
2015
2016
2017
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
“Q1’17 may have been quiet for fintech investment in Mexico, but interest is still evident. The
country continues to be a great place to invest because the cost of investment compared to the US
and elsewhere isn’t as steep. It is much lower risk, but the potential for reward is high — particularly
for companies that can attract Mexico and Latin America’s large unbanked and underbanked
populations.”
Francisco Lopez
Advisory Leader, Financial Services,
KPMG in Mexico
Oliver Cunningham
Partne , Manageme t Consulting and Financial Services,
i
Brazil
“Latin America and Brazil specific lly are unique when it comes t investing in fintech companies.
Rath r than concentrating on ways to improve customer service, fintech strtups appear to be
f cusing more on improving efficiencies across the value chain of fin
cial services, from
regulatory compliance to supply chain management.”
24
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech PE activity in the Americas
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017)
April 27, 2017. Datasets that consist of solely PE transactions have extrapolated deal values.
After a blockbuster year for PE investors in fintech across the Americas — in terms of volume at least, if not
the total value of transactions — a cyclical downturn is somewhat to be expected. Although a handful of
hefty buyouts led to a robust $1.4 billion in total value in Q1 alone.
$4.5
$4.2
$2.0
$8.4
$12.9
$6.0
$6.4
$1.4
29
33
34
60
64
41
69
13
2010
2011
2012
2013
2014
2015
2016
2017*
Deal value ($B)
# of closed deals
25
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech M&A activity in the Americas
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017)
April 27, 2017.
In historical context, the slower start to 2017 in M&A value and volume is more a reflection of temporary
reversion to the mean, more than anything else. It will be interesting to see how the year pans out in light of
anticipated consolidation among the tech industry as a whole.
$4.1
$7.5
$2.6
$7.4
$11.0
$31.2
$9.9
$0.6
60
88
101
109
127
168
143
27
2010
2011
2012
2013
2014
2015
2016
2017*
Deal value ($B)
# of closed deals
26
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Median fintech venture financing size ($M) by stage in the Americas
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017)
April 27, 2017.
Late-stage financing sizes may be down in the Americas, but pre-money valuations have essentially
stabilized around $20 million, although more time will be necessary to ensure sample sizes are robust
enough by stage. That said, VCs that are writing checks nowadays are still willing to deploy fairly hefty sums.
$0.5
$0.6
$0.5
$0.6
$0.8
$1.3
$1.0
$1.4
$2.5
$3.8
$3.0
$3.0
$3.7
$5.0
$6.8
$6.3
$7.1
$9.0
$8.4
$13.0
$16.0
$20.5
$20.3
$8.5
2010
2011
2012
2013
2014
2015
2016
2017*
Angel/seed
Early stage VC
Later stage VC
Median fintech venture pre-valuation ($M) in the Americas
2010 — Q1’17
$8.4
$17.9
$13.3
$15.2
$15.2
$19.7
$20.6
$20.0
2010
2011
2012
2013
2014
2015
2016
2017*
27
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech venture capital activity in the Americas with corporate
participation
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
Corporate VC arms appear to have rationales for investing beyond those of traditional venture firms,
especially when it comes to certain sectors, such as fintech. That said, on a regional basis, overall VC
volume within fintech decreases and to an extent timing plays a significant role — however, 15% of total VC
activity is still on the historically higher end.
0%
5%
10%
15%
20%
25%
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010
2011
2012
2013
2014
2015
2016
2017
Capital invested ($B)
% of total deal count
28
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
“We’re seeing a big shift towards enablement here in Canada and across the Americas.
Previously, many fintech companies thought they would take over the world. Now, it seems they
are changing their mindset - recognizing that partnering with banks and insurance companies
can be a much faster path towards monetization.”
Fintech VC, PE and M&A activity in Canada
2013 - Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
Thanks to DirectCash Payments’ purchase by Cardtronics, Canada saw a spurt upwards of total
transactional value, even as activity remained lower on a historical basis.
0
2
4
6
8
10
12
14
16
18
20
$0.0
$50.0
$100.0
$150.0
$200.0
$250.0
$300.0
$350.0
$400.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2013
2014
2015
2016
2017
Deal value ($M)
# of deals closed
John Armstrong
National Industry Leader, Financial Services,
KPMG in Canada
29
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
In Q1’17, US fintech
companies received
investment of
across
124 deals
30
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech investment in the US held steady in Q1’17 with $1.5 billion invested across 124 deals, despite
uncertainty related to the change in administration. While there appeared to be a growing sense of positivity
among investors, many likely held back from making deals in order to assess whether promised changes to
trade and tax policies would be implemented.
During the quarter, VC investment increased to $1.2 billion while deal activity also grew. The number of late-stage
deals in particular increased, reaching the highest level since Q1’16. This uptick likely reflects an ongoing investor
focus on proven fintech companies. Given the amount of dry powder in the market and indications that tax changes
may be delayed until 2018, it is likely that interest and investment in fintech will pick up in Q2’17.
Fintech companies maturing, attracting more investment
First-time financings for fintechs in the US dropped in Q1’17 — a sign, perhaps, of a maturing fintech sector,
particularly in payments and lending. Historically, many investors used a diversification strategy for
investments, providing smaller funding amounts to a broader range of companies. In recent quarters, however,
some fintechs have risen above the competition, maturing into high potential organizations or even clear
winners. This has led many investors to invest more into these companies rather than broaden their
investments further. At the same time, fintech investors seem to have also focused on follow-on investments
as a means of de-risking, given uncertainties related to future US trade and tax policies.
Large US fintechs focusing on expansion
During Q1’17, larger US fintech players seemed to look toward expansion to fuel growth, raising funds to support
geographic expansion, product or services expansion or both. SoFi was a prime example. The unicorn company’s
$453 million Series G funding round was aimed at supporting expansion into Australia and Asia. During Q1’17, SoFi
also acquired Zenbanx as a means to expand its product offering to include more traditional banking services.
Corporate participation remains high as investors focus on long term
Corporate participation in fintech investment remained high in Q1’17. With significant cash reserves, many
corporates have taken an opportunistic approach to their fintech investments rather than focusing on short-
term market drivers. Corporates appear to have also expanded the breadth of their fintech investments,
working to develop partnerships, alliances, incubators, accelerators and digital labs, in addition to making VC
investments or outright acquisitions. While this shift has been positive for the fintech evolution as a whole, it
has also highlighted the need to find ways to measure the ROI of fintech initiatives to ensure they are aligned
to long-term objectives.
Robo-advisory moving beyond millennials focus
Robo-advisory continued to gain momentum in Q1’17 amid growing recognition that it is beyond the millennial
demographic. As pure play fintech companies like Wealthsimple and Modern Advisor began to offer robo-
advisory and hybrid advisory services targeted to higher net worth individuals, traditional financial institutions
also made significant investments in robo-advisory to both attract millennials and retain their higher net worth
clients. For example, Wells Fargo announced in March that it would begin providing Intuitive Advisor, a hybrid
robo-advisory service, starting in June 2017.
Traditional banks appear to have also looked to extend their hybrid services model to other banking interactions. In
this vein, Bank of America opened a number of teller-less branches during Q1’17, which leverage videoconferencing
to provide more complex services. Integration of robo-advisors could be the next step in the robo-bank evolution.
Trends to watch in the US
Looking ahead to Q2’17, robo-advisory, AI and data analytics are expected to be hot investment areas, particularly
for corporates looking to provide better customer experiences and more targeted services. Investment in insurtech is
also likely to gain momentum, in addition to regtech, despite the US administration’s promise to decrease
regulations. On the regulatory front, advances related to the proposed fintech banking charters will be a key area to
watch as changes could have a major impact on the fintech market.
31
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017)
April 27, 2017.
Considered in the context of the wider cooling in the venture industry as a whole, plus taking into account the
fact that fintech remains a relatively youthful arena, the downturn in overall investment isn’t so much a sign
of waning interest in fintech in general, but a temporary phenomenon. What is more promising is that venture
investment in particular bolstered Q1'17 tallies, with investors still willing to back promising fintech
enterprises.
$4.7
$8.6
$3.9
$9.1
$15.2
$37.3
$14.2
$1.5
190
282
359
461
629
675
539
124
2010
2011
2012
2013
2014
2015
2016
2017*
Deal value ($B)
# of closed deals
Total US fintech investment activity (VC, PE and M&A) in fintech companies
2010 — Q1’17
32
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Venture investment in fintech companies in the US
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
As certain fintech sub-verticals approach inflection points of either consolidation or emergence of clear front-
runners, late-stage venture financing can often pick up, as investors flock to back proven businesses that
need capital to cement expansive growth.
0
20
40
60
80
100
120
140
160
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010
2011
2012
2013
2014
2015
2016
2017
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
“Because of their unique business models and distribution channels, we’re likely to see more
well-established US fintechs pushing to expand in ways that few brick and mortar companies
can. SoFi, for example, recently executed on plans for product expansion through the acquisition
of Zenbanx and geographic expansion focused on Australia and Asia through a $450 million
funding round.”
Conor Moore
National Co-Lead Partner, KPMG Venture Capital Practice,
KPMG in the US
33
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech PE activity in the US
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017)
April 27, 2017. Datasets that consist of solely PE transactions have extrapolated deal values.
It’s not just that technology-focused PE firms such as Silver Lake are making inroads in the late-stage
venture scene, but that plenty of other PE firms have been cutting checks within the fintech arena specifically
as of late, with a peak of 64 last year alone. The robust sum of $1.2 billion in total PE deal value in Q1'17
testifies to a continuing level of interest, even if deal volume is temporarily down.
$4.4
$4.1
$1.9
$8.0
$12.0
$5.9
$6.2
$1.2
27
32
31
53
56
40
64
11
2010
2011
2012
2013
2014
2015
2016
2017*
Deal value ($B)
# of closed deals
34
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech M&A activity in the US
2010 — Q1’17
As noted previously,
fintech M&A is off to a
slow start, with Q1'17
seeing a level that is
more reminiscent of pre-
2014 volume. That said,
especially in a nascent
arena, timing plays a
significant role in overall
M&A volume and
consequently value
trends. Further
consolidation and
acquisitions by
incumbents to shore up
their positions are only to
be expected going
forward.
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017)
April 27, 2017.
“Financial institutions are not just investing in fintechs, they are actively looking to integrate the
capabilities of the fintechs they invest in into their value chain and business model. I think we’ll
continue to see this across many areas of fintech into the foreseeable future.“
Anthony Rjeily
Principal, Financial Services Digital and Fintech Practice Lead,
KPMG in the US
$4.0
$7.5
$2.4
$7.3
$10.6 $31.0
$9.7
$0.2
51
78
83
93
113
147
125
24
2010
2011
2012
2013
2014
2015
2016
2017*
Deal value ($B)
# of closed deals
35
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Median fintech venture financing size ($M) in the US
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017)
April 27, 2017.
$0.5
$0.8
$0.5
$0.6
$0.9
$1.3
$1.0
$1.4
$2.5
$3.8
$3.0
$3.2
$4.0
$5.0
$7.1
$6.3
$7.3
$9.0
$8.5
$12.8
$17.9
$21.0
$24.3
$10.0
2010
2011
2012
2013
2014
2015
2016
2017*
Angel/seed
Early stage VC
Later stage VC
Median fintech venture pre-valuation ($M) in the US
2010 — Q1’17
$8
$18
$13
$16
$16
$20
$22
$20
2010
2011
2012
2013
2014
2015
2016
2017*
36
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech venture capital activity in the US with corporate venture participation
2010 — Q1’17
0%
5%
10%
15%
20%
25%
$0.0
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q
2010
2011
2012
2013
2014
2015
2016 2017
Capital invested ($B)
% of total deal count
“Corporate investment in the US is evolving. It seems to be maturing away from innovation
tourism toward making targeted fintech investments that can be integrated into long-term
corporate strategy.”
Ann Armstrong
US National Fintech Co-Leader,
KPMG in the US
The historical volatility in
the rate at which
corporate venture arms
or corporation
participation in fintech VC
activity signifies the
relatively limited number
of players within the
space more than
anything else, plus the
extent to which many
strategic initiatives have
focused on only a few
fintech sub-vertical
segments.
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
37
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech venture investment (#) in the US by region
Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
9%
28%
2%
2%
8%
4%
8%
39%
Great Lakes
Mid-Atlantic
Midwest
Mountain
New England
Other Territory
South
Southeast
West Coast
2.5%
18.7%
0.8%
0.9%
5.1%
1.3%
3.0%
67.6%
Great Lakes
Mid-Atlantic
Midwest
Mountain
New England
Other Territory
South
Southeast
West Coast
Fintech venture investment ($) in the US by region
Q1’17
38
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
10
7
6
3
8
5
4
9
2
1
SoFi — $453M, San Francisco
Personal finance
Series G
UniRush — $147M, Cincinnati
Personal finance
M&A
Zenbanx — $100M, Claymont
Payments/transactions
M&A
ProducePay — $77M, Los Angeles
Lending
early-stage VC
Kensho — $50M, Cambridge
Institutional/B2B
Series C2
7
8
6
9
10
5
4
3
2
1
CommonBond — $37.5M, New York
Lending
Series D
Upstart Network — $32.5M, San Carlos
Lending
Series B
Tala — $30M, Los Angeles
Lending
Series C
TruMid — $27.6M, New York
Investment banking/capital markets
Series E
InvestCloud — $25.2M, Beverly Hills
Wealth/investment management
Series C
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
39
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
In Q1’17, investment
in fintech companies
in Europe hit
across
89 deals
40
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Overall fintech investment in Europe grew in Q1’17, with $880 million invested across 89 deals. Of these totals, VC
investment accounted for $610 million across 67 deals — the strongest quarter of European VC fintech investment
in recent memory.
Brexit-related uncertainties appeared to have little impact on Q1’17 investments, with the UK accounting for half of
the top ten European investments. The country also continued to attract global VC investment — with London-
based cross-border payments company CurrencyCloud raising $25 million from Google Ventures. This investment
represents Google Venture’s first foray into the European VC fintech market. While Germany hosted three
additional deals in the top ten, Stockholm-based iZettle’s $175 million raise was the largest this quarter,
highlighting the growing depth of the Nordic fintech ecosystem. Smaller fintech hubs also continued to sprout in
locations like Israel, Poland, the Czech Republic and Slovakia.
Median deal sizes up as investors focus on later stage deals
Median fintech deal sizes in Europe continued to increase, reaching $3.17 million during Q1’17. This reflected a growing
shift toward investments in more mature fintech companies with proven business models — investments that can be
seen as a safe harbor in uncertain times. Well established payments and lending companies accounted for many of the
largest deals, including $100 million plus rounds to iZettle and Funding Circle.
Rapidly approaching PSD2 fostering fintech activity
The 2018 implementation of PSD2 is quickly approaching. In Q1’17, there was a strong push from both traditional
corporates and fintechs to understand the ramifications of PSD2 and how to take advantage of related
opportunities. It is expected that over the course of the next 3 quarters, investments related to PSD2 business
models will continue to increase.
German-based fintech ecosystem continues to evolve
Germany saw a significant amount of investment in fintech during Q1’17, hosting four of the top ten regional fintech
deals, including rounds to banking platform provider, Solarisbank, and deposits marketplace, Raisin. Q1’17 also
saw an increased focus on business-to-business fintech opportunities, likely reflecting both the desire to take
advantage of PSD2 and growing recognition that fintechs can enable business transformation.
Challenger banks strong in UK
Q1’17 saw a number of significant raises by challenger banks, including a $103 million round by Atom Bank and
Monzo’s$27.5 million Series C round. These rounds continued an 18-month trend that has seen the UK give rise to
more challenger banks than most other jurisdictions. The growth of challenger banks shows the value of
government support for fintech, with both the UK government and the FCA focused on encouraging greater
competition.1
The FCA appears to have also continued efforts to build bilateral partnerships with regulators internationally. In
Q1’17, the FCA announced a partnership with the Ontario Securities Commission in Canada. With Article 50 now
triggered and with the Brexit process underway, these types of initiatives may be critical to the success of the UK’s
fintech ecosystem in a post-Brexit world.
Ireland gaining prominence on the fintech radar
Ireland continued to grow as a fintech centre in Q1’17, with numerous initiatives focused on showcasing the
country as an alternative to London. Q1’17 saw a number of mature fintech companies in the region announce
expansion plans, including client lifecycle management company Fenego. The country has also successfully
attracted a number of fintechs to set up regional offices in Ireland, including Kabbage. Additional fintech investment
is expected over the next few quarters as the country continues to market its ability to be a bridge to both the UK
and Europe.
Trends to watch for in Europe
PSD2 will likely continue to drive fintech investment over the next few quarters in Europe as the implementation
deadline approaches, with activity expected both on the API front and on the development of niche offerings that
leverage open data. Investment in regtech and insurtech is also expected to grow.
1. https://www.ft.com/content/3068994c-bf71-11e5-9fdb-87b8d15baec2
41
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017)
April 27, 2017.
Skewed massively by outliers, 2016 fintech transaction value was so immense that 2017 had a tough act to
follow. Although volume remained healthy on a historical basis, total deal value in the first quarter of the year
looks relatively paltry compared to the prior year. However, apart from temporal factors, as seen by the
massive financings of companies such as iZettle and Funding Circle, as well as the pending purchase of
ConCardis by Advent International and Bain Capital, there remains plenty of appetite for European fintech
companies.
Total Europe fintech investment activity (VC, PE and M&A) in fintech companies
2010 — Q1’17
$6.0
$4.0
$1.2
$3.4
$13.4
$12.5
$10.9
$0.9
109
138
167
246
334
411
380
89
2010
2011
2012
2013
2014
2015
2016
2017*
Deal value ($B)
# of closed deals
42
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Venture investment in fintech companies in Europe
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
“VC investment in Europe reached a new high in Q1, highlighting the strong opportunities
present in the sector. Corporate participation is expected to help keep this trend going as many
traditional companies are looking to take advantage of innovations.”
Arik Speier
Co-Leader, KPMG Enterprise Innovative Startups Network and Head of Technology,
KPMG in Israel
0
10
20
30
40
50
60
70
80
90
100
$0.0
$0.1
$0.2
$0.3
$0.4
$0.5
$0.6
$0.7
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010
2011
2012
2013
2014
2015
2016
2017
Capital invested ($B)
# of deals closed
Angel/Seed
Early VC
Later VC
43
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech PE activity in Europe
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017)
April 27, 2017. Datasets that consist of solely PE transactions have extrapolated deal values.
PE activity within the
European fintech scene
remains on pace to
match last year’s tally.
Although it is more than
likely that either timing or
cyclicality due to the
relatively lower supply of
worthwhile targets, could
lead to lowering buyout
volume in the quarters to
come.
“Challenger banking is starting to come of age in the UK. Over the last 5 years, there was a flurry
of new startups. Now, we’re starting to see several of them come into their own. Fintechs, like
Monzo and Starling, are now seen as legitimate financial institutions with bank licenses and
corporate capitalization.”
Tom Roberts
Director, Banking,
KPMG in the UK
$5.6
$2.9
$1.5
$4.7
$12.0
$11.2
$3.9
$1.0
23
27
19
32
41
56
44
11
2010
2011
2012
2013
2014
2015
2016
2017*
Deal value ($B)
# of closed deals
44
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech M&A activity in Europe
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017)
April 27, 2017.
After a sudden surge in activity in 2015, M&A returned to a level that was well within historical bounds. Value
declined considerably in a shift more attributable to a dearth of mega-deals than anything else.
$5.8
$3.7
$0.9
$3.0
$12.2
$11.0
$9.5
$1.0
68
70
64
76
87
135
95
23
2010
2011
2012
2013
2014
2015
2016
2017*
Deal value ($B)
# of closed deals
45
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Median fintech venture financing size ($M) in Europe
2010 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook, *as of 3/31/2017)
April 27, 2017.
Median financing sizes hit new highs across all stages, signifying the level of pent-up demand for those
fintech companies deemed safest by VC investors.
“The deadline for implementing PSD2 is now fast approaching. As we move through 2017,
expect to see new business models evolving to leverage open data and to capitalize on the
opportunities presented."
Anna Scally
Partner, Head of Technology and Media and FinTech Leader,
KPMG in Ireland
$0.9
$0.5
$0.4
$0.3
$0.5
$0.6
$0.8
$1.3
$3.7
$1.4
$1.6
$2.7
$3.3
$5.0
$4.0
$5.4
$5.0
$5.5
$3.5
$4.3
$13.0
$14.9
$9.5
$15.9
2010
2011
2012
2013
2014
2015
2016
2017*
Angel/seed
Early stage VC
Later stage VC
46
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech venture activity in Europe with corporate VC participation
2013 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
The upward spike in the proportion of corporate VC involvement, especially in the European scene, is
relatively unsurprising. Given the potential of fintech within certain business operations for financial
institutions and even certain corporations, there is plenty of reason for them to retain exposure.
0%
5%
10%
15%
20%
25%
$0.0
$0.1
$0.1
$0.2
$0.2
$0.3
$0.3
$0.4
1Q
2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2013
2014
2015
2016
2017
Capital invested ($B)
% of total deal count
47
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech VC, PE and M&A activity in the United Kingdom
2013 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
Boasting as the world’s financial capital, the UK’s fintech scene enjoys a plethora of advantages. With deal
activity chugging along at a steady level over the past four quarters, it is also clear that so far any Brexit-
related uncertainty has not negatively impacted UK fintech transactional flow.
0
10
20
30
40
50
60
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010
2011
2012
2013
2014
2015
2016
2017
Deal value ($B)
# of deals closed
“We didn’t see much of an impact from Brexit in Q1’17 —which is good, but somewhat of a
surprise, given fintech could be one of the most affected sectors. It will be interesting to see if
deal activity changes now that Article 50 has been triggered and the negotiation process begins.”
Patrick Imbach
Head of KPMG Tech Growth,
KPMG in the UK
48
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech VC, PE and M&A activity in Germany
2014 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
Bolstered by considerable VC activity in terms of deal volume, Germany saw its highest tally of completed
deals in years. Consequently, value also experienced an uptick, although dwarfed by a few mega-deals in
2015.
0
5
10
15
20
25
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
$700.0
$800.0
$900.0
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2014
2015
2016
2017
Deal value ($M)
# of deals closed
“We have twenty-seven countries, so there is a lot of local innovation. This is an advantage for
Europe as its diversity is driving new business models and opportunities. Even small countries
like Poland, the Czech Republic and Slovakia are growing fintech companies. Success is
happening everywhere. It’s not limited to London or Berlin.”
Sven Korschinowski
Partner, Financial Services,
KPMG in Germany
49
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech venture investment in Israel
2012 — Q1’17
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
The fintech downturn in Israel may be surprising at first, given a steady full year of amassing significant sums
in 2016, however the quarter’s results are consistent with the pre-2016 era of fintech investment in the
country.
0
1
2
3
4
5
6
7
8
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2012
2013
2014
2015
2016
2017
Capital invested ($M)
# of deals closed
50
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
10
7
6
3
8
5
4
9
2
1
iZettle — $175.2M, Stockholm
Payments/transactions
Series D
Atom Bank — $103.6M, Durham
Institutional/B2B
PE growth
Funding Circle — $101.1M, London
Lending
Series F
BillPay — $64.7M, Berlin
Payments/transactions
M&A
Raisin — $31.9M, Berlin
Personal finance
Series C
7
8
6
9
10
5
4
3
2
1
SolarisBank — $28M, Berlin
Institutional/B2B
Series A
Monzo — $27.5M, London
Personal finance
Series C
CurrencyCloud — $25.0M, London
Payments/transactions
Series D
CompareEuropeGroup — $21.2M, London
Personal finance
Series A
VATBox — $20M, Herzliya
Institutional/B2B
PE growth
Source: Pulse of Fintech Q1'17, Global Analysis of Investment in Fintech, KPMG International (data provided by PitchBook) April 27, 2017.
51
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
In Q1’17, investment
in fintech companies
in Asia hit
across
33 deals
52
© 2017 KPMG International Cooperative (“KPMG International”). KPMG International provides no client
services and is a Swiss entity with which the independent member firms of the KPMG network are affiliated.
#FINTECH
Fintech investment in Asia declined significantly in Q1’17, primarily due to a lack of mega-deals which have been
critical to peak quarters in the past. Despite the drop, interest in fintech across the region grew, with many
countries attracting attention. Global fintech players also showed strong interest in Asia during Q1’17, with US-
based SoFi planning to leverage its most recent funding round to drive expansion into Australia and Asia.
Fintech activity increasing outside China
China and India have attracted the majority of fintech funding historically, although Hon