SINGAPORE (Oct 15): Investment in financial technology (fintech) deals in Singapore has crossed the $1 billion mark in the first nine months of 2019, according to a study by consulting firm Accenture, drawing data from CB Insights, Pitchbook and Tracxn.
The total value of fintech deals in the nine months ended Sept 30 jumped 69% y-o-y to US$735 million ($1,006 million) from US$435 million. In contrast, the total value of the deals in 2018 was US$642 million.
“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,” says Sopnendu Mohanty, chief fintech officer of the Monetary Authority of Singapore.
The study shows that investors are making bigger, individual bets. While the quantum increased, the number of fintech deals has dropped. In the same nine-month period, the number of deals dropped by 29% y-o-y to 94 from 133.
According to the study, investors have been turning their attention towards more developed companies, at the expense of early-stage ones, which experienced funding declines of 56%. More mature ventures received 66% more in funding.
Within the overall fintech space, investors are the most enthusiastic putting their money in payments start-ups. Some 34% of the deal value were in this segment. Start-ups in lending accounted for the next largest portion, at 20%, of total deal value. Insurtech, meanwhile, came in third at 17%.
However, there’s strong momentum behind insurtech. Funding in this segment grew the fastest compared to other segments. It nearly quadrupled to US$128 million from US$35 million. Total value of investment in payments increased by 112% to US$251 million. Funding for lending increased by just over half to US$145 million.
Accenture notes in the study that there’s less enthusiasm for startups. Angel and seed funding that focuses on the earliest stage of capital raising for startups dropped 56%, to US$54 million, and the number of those deals declined 46%, to 29.
By contrast, series funding, which typically targets companies looking to grow their business with external capital as they mature, jumped 66% to US$442 million. However, the number of deals barely 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,” says 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,” he adds.
MAS’ Mohanty observes 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,” he says.
