THE Q3 2016 VC FINTECH INVESTMENT LANDSCAPENovember 2016
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THE 2016 VC FINTECH INVESTMENT LANDSCAPE
2Source: Pitchbook
§ 2016 has seen 839 deals globally attracting $15.2bn of investment
§ Global investment is up 27% to Q3 2016 vs the same period in 2015 and has surpassed the 2015 total of $14.9bn
§ Global deal size is slightly ahead of 2015 Q3 levels, with the average increasing from $14.3m to $18.1m, partially attributable to large Chinese investments such as Alipay
§ VC investment in the UK to Q3 2016 is down 26% at $532m YOY and has only just reached the halfway mark of the total 2015 investment of $1.1m
§ Q1 2016 YOY performance in the UK kept pace but Q2 2016 slowed dramatically to 33% of Q2 2015 investments which many analysts contributed to the general uncertainty in the run up to the Brexit referendum on 23 June 16
§ Q3 2016 recovered modestly with $139m in investment, 7% better than Q3 2015. 8 of the Top 20 UK deals closed post Brexit,23 June 2016, totaling $105m
§ The UK attracted 76 deals, the highest volume outside the US at 457, and was third in terms of total investment of $532m behind US at $5,265m and China at $7,117m
§ The UK’s Starling Bank, which raised $101m, was the only UK investment in the Global Top 20 global deals
§ Challenger Banks attracted the most investment in the UK. Starling Bank, SETL, Tandem Bank, Sonovate and Ezbob round up the top 5 FinTech deals in the UK, all over $25m in deal size
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Global
3
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GLOBAL FINTECH VC DEAL VOLUME to Q3 2016
U.S.457
Mexico8
Sweden19
Canada18
Brazil5
Russia8
Australia18
Singapore21
India37
Japan7
China14
Ireland7
France18
Germany19
Switzerland5
Netherlands7
U.K.76
Israel14
≥ 50
≥ 15
≥ 5
≥ 1
4
839 deals in total in 57 countries Source: Pitchbook
Denmark5
Finland5
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GLOBAL FINTECH VC INVESTMENT to Q3 2016
U.S.$5,265m
Sweden$54m
Canada$67m
Brazil$79m
Australia$85m
India$226m
Japan$61m
China$7,117m
Ireland$518m
France$57m
Germany$346m
Switzerland$39m
U.K.$532m
Israel$161m
≥ $500m
≥ $100m
≥ $50m
≥ $10m
≥ £10k
5
$15.2 billion invested over 839 deals
Vietnam$28m
South Korea $24m
Source: Pitchbook
Hong Kong$170m
Mexico$64m
Singapore$35m
Denmark$24m
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2,0445,462
3,314
7,4016,573
2,3102,962
2,590
6,260
12,260
14,890 15,173
524
760
9831,074
839
0
200
400
600
800
1,000
0
5000
10000
15000
20000
2012 2013 2014 2015 Q3 2016
# o
f dea
ls
Capi
tal I
nves
ted
(USD
$m
)
275 279
313114
130
139
369
191
730 72254
74
110 107
76
0
20
40
60
80
100
120
0
200
400
600
800
1,000
1,200
1,400
2012 2013 2014 2015 Q3 2016
# o
f dea
ls
Capi
tal I
nves
ted
(USD
$m
)
Q1 Q2 Q3 Q4 Number of deals
GLOBAL
FINTECH VC INVESTMENT
§ Global investment to Q3 2016 has increased 27% YoY vs Q3 2015 to $15.2bn
§ 2016 investment has already surpassed the 2015 total of $14.9bn
§ Q3 has slowed to 65% of the YoY investment
6
THE UK
§ UK investment to Q3 2016 has decreased 26% YoY vs Q3 2015
§ UK investment has only just reached the halfway mark of the total 2015 investment of $1.1m
§ Q2 2016 slowed dramatically to 33% of Q2 2015 possibly due to Brexit
§ 8 of the Top 20 UK deals closed post Brexit 23 June 2016 totaling $105m
Source: Pitchbook
Q3 YoY+7%
Q3 YoY-65%
1,090
532
2016 Global VC FinTech Investment
2016 UK VC FinTech Investment
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TOP FINTECH VC DEALS YTD Q3 2016§ Globally the top 3 deals came from China, however the US saw the highest deal volume, with 10 of the top 20 deals
Country:
Sector: Payments
Date: 26-Apr-16
Series: B
Size: $4,500m
Country:
Sector: InsurTech
Date: 22-Feb-16
Series: Undisclosed
Size: $400m
Country:
Sector: Capital Markets
Date: 15-Jan-16
Series: Undisclosed
Size: $1,200m
Country:
Sector: Consumer Finance
Date: 16-Jan-16
Series: A
Size: $1,013m
Country:
Sector: CapitalMarkets
Date: 31-May-16
Series: Undisclosed
Size: $400m
§ In the UK only the top deal was in the top 20 deals globally
Country:
Sector: Challenger Banks
Date: 11-Jan-16
Series: Angel
Size: $101m
Country:
Sector: Blockchain
Date: 15-Jul-16
Series: Angel
Size: $39.5m
Country:
Sector: Challenger Banks
Date: 12-May-16
Series: B
Size: $32m
Country:
Sector: SME Financing
Date: 28-Jan-16
Series: A
Size: $29m
Country:
Sector: SME Financing
Date: 10-Mar-16
Series: Undisclosed
Size: $28.5m
Source: Pitchbook
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19
18
18
9
9
9
8
8
8
8
8
7
6
6
6
6
6
Techstars
Y Combinator
500 Startups
Startupbootcamp
Sequoia Capital
Digital Currency Group
Khosla Ventures
Index Ventures
Foundersclub
Founders Fund
Financial Solutions Lab
Peter Thiel
Valar Ventures
QED Investors
Point Nine Capital
Foundation for Internet Development-…
Fenway Summer Ventures
Top global investors by number of investments
Top 20 global deals by deal value ($M)
TOP GLOBAL INVESTORS AND DEALS - YTD Q3 2016§ Techstars was the top global investor and there was one UK deal in the top 20 global deals
Source: Pitchbook
4,500
1,200
1,013
400
400
310
250
237
220
212
200
165
153
150
127
103
101
100
100
100
AliPay (China)
Lu.com (China)
JD Finance (China)
ION Trading (Ireland)
Oscar (US)
51credit.com (China)
LendingHome (US)
QuarterSpot (US)
Solar Mosaic (US)
PowerPlan (US)
Dividend Solar (US)
WeLab (Hong Kong)
Weidai.com (China)
LendUp (US)
DoorDash (US)
Kreditech (Germany)
Starling Bank (UK)
The Direct Pay Online Group (Ireland)
Affirm (US)
Betterment (US)
UK deal
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UK
9
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UK FINTECH VC DEALS - YTD Q3 2016 BY VERTICAL AND STAGE§ In the UK over 60% of deals where in Challenger Banks, SME Financing, Money Transfer
and FX and Digital Currencies and Blockchain verticals
Source: Pitchbook
Challenger Banks27%
SME Financing13%
Money Transfer & FX
13%
Digital Currencies & Blockchain
8%
Crowdfunding7%
Alternative Finance (other)…
Payments6%
Enterprise Software
6%
Other3%
Peer-to-Peer3%
Financial Inclusion and
Education3%
Wealth Management
2%
Capital Markets
2% Data & Analytics
1%
2.81
2.78
60.61
85.54
99.49
280.73
0.00 50.00 100.00 150.00 200.00 250.00 300.00
0 - 499K
500K - 0.9M
1M - 4.9M
5M - 9.9M
10M - 24.9M
25M+
USD (m)
Dea
l siz
e
Deal value (number of deals)
UK deals by vertical UK deals by value
(7)
(8)
(11)
(23)
(4)
(23)
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Top UK investors by number of investments Top 20 UK deals by deal value ($M)
5
4
3
3
3
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
Entrepreneur First
Balderton Capital
Techstars
Passion Capital
Index Ventures
William Reeve
Venrex
Velocity Capital Private Equity
Seedcamp
Samos Investments
Point Nine Capital
Notion Capital
MCI Capital
LocalGlobe
Holzbrinck Ventures
Global Founders Capital
e.ventures
DN Capital
Dawn Capital
Alex Chesterman
TOP UK INVESTORS AND DEALS - YTD Q3 2016§ Entrepreneur First was the UK’s top investor and within the top 20 UK deals there were 7
Innovate Finance members
Source: Pitchbook
101.0 39.5
31.9 28.9 28.5
26.0 25.0
22.6 13.4 13.0
10.5 10.0 10.0 10.0 10.0 9.6 9.5 8.7 8.2 8.2
Starling BankSETL
Tandem (Retail Bank)Sonovate
EzbobTransferWise
LendInvestProperty Partner
AzimoGoCardlessCrowdcube
Money Guide AppWeSwap.com
PaylevenReceipt Bank
RevolutMarketInvoice
NeyberDueCourse
Meniga
Innovate Finance member
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Sector: FX
Date: 11-Jul-16
Series: A
Size: $9.6m
MainInvestors
BaldertonCapital. Ribbit Capital, Index Ventures
Sector: Peer-to-Peer
Date: 18-Julr-16
Series: Undisclosed
Size: $9.5m
MainInvestors
MCI Capital,North Zone Ventures
Sector: SME Financing
Date: 19-Sep-16
Series: Undisclosed
Size: $8.3m
MainInvestors
Global Founders Capital, Simon Franks, Alex Chesterman
Sector: Financial Inclusion
Date: 23-Aug-16
Series: B
Size: $8.2m
MainInvestors
Velocity Capital Private Equity and Frumtak
Sector: Blockchain
Date: 15-Jul-16
Series: Angel
Size: $39.5m
MainInvestors Undisclosed
Sector: Crowdfunding
Date: 18-Aug-16
Series: Undisclosed
Size: $10.5m
MainInvestors
Crowdfunded(own platform)
Sector: Other
Date: 15-Aug-16
Series: Angel
Size: $10m
MainInvestors Undisclosed
Sector: FX
Date: 11-Jul-16
Series: B
Size: $10m
MainInvestors
Ascot Capital Partners, EC1 Capital, IW Capital
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POST BREXIT ROUNDS IN UK§ 8 of the top 20 deals in the UK were post Brexit, totaling $105m of investment
Source: Pitchbook
Money Guide App
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UK Q3 2016 analysis§ 64% of investment was follow-on investment, with 67% of investment coming from investors domiciled
in the UK
Source: Pitchbook
Digital Currencies & Blockchain,
28%
Money Transfer & FX, 15%
SME Financing, 9%
Other, 10%
Crowdfunding, 8%
Payments, 5%
Enterprise Software, 1%
Peer-to-Peer, 7%
Financial Inclusion and Education, 6%
Wealth Management, 6%
Capital Markets, 1%
Data & Analytics, 3%
59%
17%
3%
17%
3%
67%
8%
0%
25%
0%0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
UK USA Asia Europe Unknown
Q3 2015
Q3 2016
• 36% new investment (mostly SETL)• 64% follow-on investments
Q3 UK deals by vertical Domicile of source of investment (Q3 2015 vs Q3 2016)
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New Funds
14
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FUND LOCATION SIZE DATE LAUCHED INVESTMENTS MADE
Singapore Initial capital of $5m from Life.SREDA, but looking to
expand to $50m by the end of 2016 and top
$100m by 2017
Apr-16 None to date
China
$200m May-16 None to date
Ireland
€500k May-16 None to date
China
Undisclosed May-16 None to date
USA
$25m Jun-16
None to date (previous funds have invested in 80 FinTech companies over
the last 6 years)
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NEW FINTECH FOCUSED FUNDS LAUNCHED IN 2016 (GLOBAL) (1/3)
Enterprise Ireland Competitive Start Fund (CSF)
§ Several FinTech focused funds have been launched in 2016 so far, a good indicator that investment momentum will continue
FinTech
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FUND LOCATION SIZE DATE LAUCHED INVESTMENTS MADE
UK
£20m Established Jun-16, launch date unknown N/A
Germany
Undisclosed Jun-16
Includes some existing investments e.g. Digital Assets holdings (Blythe
Masters’ Blockchainstartup)
Switzerland
CHF 10m Jun-16 None to date
UK
£100m (follow on investment) Jul-16
Original fund has invested in Ripple (Blockchain - US),
iZettle (payments -Sweden), Elliptic
(Blockchain – UK).
USA
$300m Sep-16
None to date however canvas's first fund, raised
in 2013, was an investor in Lending Club
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NEW FINTECH FOCUSED FUNDS LAUNCHED IN 2016 (GLOBAL) (2/3)
DB1 Ventures
Ventures
§ Several FinTech focused funds have been launched in 2016 so far, a good indicator that investment momentum will continue
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FUND LOCATION SIZE DATE LAUCHED INVESTMENTS MADE
Europe €300m Sep-16
One investment from previously fund
“Northzone VIII” – Zervant(A-invoicing – Finland)
Europe £7.4m Sep-16 (unfrozen after Brexit pause) None to date
Australia Initially seeking to raise$27.5m - $55m via IPO, however the minimum
amount was not raised so the fund is going private
Sep-16 N/A
17
NEW FINTECH FOCUSED FUNDS LAUNCHED IN 2016 (GLOBAL) (3/3)
Capital Accelerate and Scale Tech Startup (CASTS)
(8th fund)
§ Several FinTech focused funds have been launched in 2016 so far, a good indicator that investment momentum will continue
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END
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