Fintech financing is no longer so smooth. According to the latest report from CBInsights and KPMG , financing in the global financial technology sector in the second quarter of this year was 49% lower than the previous quarter and 51% lower than the same period of last year. The situation is as follows:
According to the reporter, the reduction in financing was due to market uncertainties, such as the Brexit vote in the United States and the United States election. Investors will inevitably slow down, especially when it comes to large-scale financing.
Of course, after a long period of speculation, investors have become more realistic and their expectations and standards for the company being invested have also become higher. They hope that there will be obvious business plans and they will be able to fully manage their resources. The most important thing is that financial technology companies still lack exit channels, such as listings or mergers and acquisitions. There are few cases of listing on the market. There are more famous companies such as Lending Club and OnDeck.
However, CBInsights still maintains optimism for investment in fintech. It is expected that the total investment this year will exceed the $14.5 billion it spent last year.
Does this mean that the obsession for reforming finance with science and technology is gradually dissipating? Nor is it. Areas such as insurance that have not been stigmatized by financial technology (also known as insurance technology) still attract a lot of financing, and the amount of financing in the second quarter reached US$1 billion.
Participation of traditional financial institutions
In addition, as attitudes toward new technologies have shifted from skepticism to active participation in the past few years, the proportion of corporate investment from banks has reached a new high. From the second quarter of 2015 to the first quarter of this year, the proportion of corporate investment has been less than 25%, and it accounted for almost one-third of the second quarter of this year. According to one analyst, the corporate investment department has more money.
Two years ago, bringing up financial technology such as Bitcoin and smart investment, all talked about alternative banks, and now the interest turned to how to cooperate with banks and jointly develop products. For example, Morgan already has its own mobile payment and blockchain projects. It also collaborates with lending companies such as OnDeck on small business lending; Citigroup has an entire department responsible for financial technology; Goldman Sachs also develops consumer lending business internally, and it used to be It invested 11 companies in the year and is the most active bank investor.
The R3 alliance created by joint ventures such as Credit Suisse, UBS, Morgan Sachs, and Goldman Sachs is the best example of traditional financial institutions participating in new technologies.
Startup company problems
For newcomers in the field of financial technology, the situation may not be so optimistic. The report pointed out that the proportion of seed round financing reached a new low of 29% since the five quarters, compared with 32-35% in the previous quarter. This may be because capital is gradually paying attention to those companies that have been proved. It is not proven to generate revenue, but companies need to understand the challenges in the financial services sector and have a reasonable regulatory strategy.
However, the other side of this situation is that early companies will have more investors’ attention. Of course, this may be limited to good companies, and there is a psychological effect of the “last boat ticket.†These companies can often be quick in the short term. Get financing. For example, the Stash, a small investment platform, recently won a round of US$9.25 million in round A financing, and the previous round of three million US dollar financing was only half a year ago.
There is no doubt that not all companies have been able to grow up in this boom of financial technology. In the end, there should be several companies that stand out. This also means that there will be a lot of mergers and acquisitions in the near future.
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