The year of 2018 was extremely successful for fintech companies looking for financial support of venture capital investors. Now when the year is over, the official figures have been revealed and they look very promising for the future of the industry.
According to the data disclosed, venture capital-backed financial technology companies managed to raise $39.57 billion from investors globally in 2018. The volume of the investments in 2018 was 120 percent up if compared to the data of the previous year.
Based on these figures provided by CB Insights, it is possible to conclude that it’s a new record for the industry.
Investors’ funds were received via 1,707 deals which shows a significant growth of their number over the year, as in 2017, there were only 1,408 deals registered.
The biggest increase in the number of deals that took place in 2018 was noticed in the Asian region. The companies there received a record $22.65 billion.
In the U.S., fintech companies managed to attract $11.89 billion (which is also a record figure) via 659 deals.
In European countries, the number of deals decreased but the volumes of funding still managed to grow and reached $3.53 billion.
The surge in funding can be partially explained by the fact that in 2018 52 mega rounds took place. Saying “mega rounds” we mean those ones that presuppose the investments larger than US$100 million. All in all, the combined share of mega investments amounted to US$24.88 billion.
According to the research, one project managed to receive 35 percent of total fintech funding alone in 2018. It was the payment affiliate of Chinese e-commerce giant Alibaba Group Holding Ltd known as Ant Financial. And it successfully raised $14 billion.
The last three months of the year were quite significant for five companies. They reached the status of fintech “unicorns” which means that they are valued at more than $1 billion. The list of new unicorns includes data aggregator Plaid, credit card provider Brex and digital bank Monzo.
Venture Capital Investors Interest
The growing interest of VC investors in the fintech sphere is rather obvious. But what are the reasons?
According to experts, venture capitalists are ready to invest billions of dollars into fintech firms as they believe that via their investments they will get access to a large market share that new financial technologies will take from traditional institutions.
Thanks to the fact that fintechs are working on providing less complicated and less expensive financial services to a wide audience, they have all chances to succeed in the market.
Such startups have been created globally in a wide range of financial sectors among which we can name banking, wealth management, and lending.
But while some companies enjoy large investments and the number of deals has reached a new height, the researchers suppose that this tendency can mean a delay for IPOs.