According to the annual research of international fintech venture capital firm Life.SREDA, fintech startups worldwide raised a total of $6.8B in 2014. This is three times more than in 2013, when the total investment amount in fintech was $2.2B.
In 2014, we witnessed the first IPOs of fintech companies, setting parameters of other fintech deals and finally uprising the status of fintech to a serious venture industry. The first to undertake IPO was the largest P2P-lending platform LendingClub, which raised $870M at $5.42B valuation. It was followed by Ondeck, SME lending service, which became listed on stock exchanges, raised $200M and was valued at $1.3B. Another evidence of the serious attitude of investors to fintech startups is the increasing number of companies which this year exceeded the valuation of $1B – Lending Club, Stripe and Square were joined by Transferwise, Kreditech, Credit Karma, Wonga, and the abovementioned Ondeck.
Leading sectors in terms of the funds raised in 2014:
- Online lending ($1.8B)
- Online acquiring and mWallets ($1.649)
- PFM/PFP-services ($959M)
- Services for small and medium business ($783M)
- Mobile acquiring ($491M)
Largest venture rounds of 2014:
- Dutch online payment platform Adyen ($250M)
- US mobile payment service Mozida ($185М)
- Chinese P2P-lending platform Renrendai ($130M)
- New rounds of global mPOS-leader Square in the amount of $150M, and Swedish online payment service Klarna, which raised $122M.
The largest number of investments still account for the US ($4.04B), but it is worth noting that this year Asia for the first time joined the top five most funded regions with $0.79B raised in investments. The most popular fintech startups in Asia are online lending and scoring platforms, PFM/PFP-services, trading, and crowdinvesting services, as well as SME services. The largest venture rounds are investments in online lending platforms: the abovementioned P2P-lending service Renrendai raised $130M from TrustBridge Partners, online lending service Fenqile raised $100М from a group of investors, the same amount was raised from BlueRun Ventures by a similar service called Qufenqi. The regional leaders in terms of fintech startups development and funding raised are China, Japan, Hong Kong, Singapore, Malaysia, and Thailand.
For the first time this year Life.SREDA VC made some calculations of mPOS-market: at the end of 2014 the total volume of transactions processed through mobile dongles was $55B, meaning that mPOS-technologies are serious competition to traditional POS-solutions, especially in countries where the penetration of POS-terminals is low. The most highly competitive markets for mPOS players are the United States ($4B) and Canada ($1B), where Square takes the lead, as well as the United Kingdom with the volume of transactions amounting to $1.5B and its market leaders are PayPal Here, iZettle, and Groupon. Life.SREDA puts special emphasis on East Asia and South America as new markets with low competition, but a large number of SMEs, large emission of bank cards and weak infrastructure for their acceptance. The most promising markets for new players are China with a turnover of mPOS transactions at $7B (leaders – local companies Qiandaibao and QFPay), Brazil with a turnover of $1B (leaders iZettle, Payleven, SumUp), Southeast Asia with a turnover of $70М (Plug’n’Play, AEON Easy Pay, iBox), and Russia with a turnover of $73M (key market players: LifePay and 2can).
“Last year we noted fold growth in FinTech VC investment, causes and consequences of which were increase of market confidence in the sector and expansion of the circle of investors, betting on FinTech. We witnessed explosive development of Asian markets, prospects of which Life.SREDA had repeatedly stated in “Money of the Future” survey. 2014 had a big significance for FinTech market – mature sector players started to pay attention to emerging competitors, while taking measures aimed to provide their future leadership, at the same time new wave of competitors, the FinTech itself, began to play a significant role in the market, facilitating shift from valuation against future potential to valuation on the basis of current multipliers and margins. Sensational IPO of 2014 aided much to sector transparency and perception on the part of analysts, investment bankers and policy makers. A whole pleiad of FinTech-dedicated funds, private and public, emerged last year, and one can hear recognized investors saying aloud what has definitely become a buzz phrase of the season: “FinTech is the next big thing!”. We expect to see yet larger volume of investments, splashy IPOs and truly disruptive technologies in forthcoming 2015.” says Vladislav Solodkiy, managing partner Life.SREDA VC.
Read the full report here.
(image credit: J R)