Fintech startups in Asia gained a record $5.4 billion in venture-capital funding last year, up from $4.8 billion in 2015.
According to data from venture capital research firm CBInsights, Asia accounted for nearly 20 percent in the number of Fintech investments worldwide. Notably, however, the deals are far more substantial in the region with 43% of the global funding taking place in Asia, in 2016.
A driving factor towards the increase in the volume and value of investments is the money poured into the Asian Fintech sector by major Chinese companies.
The $5.4 billion is recorded across 165 transactions or funding deals in 2016, up from 162 in 2015. On the global stage, the $5.4 billion VC investments into Asian financial technology startups is almost equivalent to the $5.5 billion raised by US-based Fintech startups, from 422 deals. Perhaps notably, 26% of all US-based unicorns now count an investor from the Greater China Region that includes China, Taiwan and Hong Kong, underlining the growing prominence of Chinese investors in the global technology space.
The soaring investment comes despite a global downturn in VC investments in 2017.
China’s Fintech Investment Heavyweights
Contributing to the soaring FinTech VC funding climate, Shenzhen-based Ping An Insurance Group, China’s largest non-state-owned financial entity with assets of over $765 billion, led a Series B round of online lender Lufax, raising $1.2 billion in early 2016 toward its wealth management and financial advisory services. The financial group also became the R3-led global enterprise blockchain consortium’s first Chinese member last year. Another funding round saw e-commerce giant JD.com raise $1 billion in January 2016. Both of these transactions made for the world’s biggest venture capital funding rounds in financial technology startups in 2016.
The CBInsights report did not include a record $4.5 billion raised by Ant Financial, an affiliate of Alibaba, China’s own Amazon-like e-commerce giant. Alipay, the company’s payment application reportedly [PDF] manages “58% of all online transactions happening in China.”
The report also highlights the reasons for China’s meteoric growth as a market for financial technologies.
The combination of higher spending power and a freer adoption of technology means that fintech has an entire market of willing and able customers. China has 380 million people shopping online via phones, nearly 200 million people using their phones as a wallet for in-store payments.
A Fintech 100 list from KPMG revealed that Chinese firms made four of the top five in the global list. They include Ant Financial, Qudian, Lufax and ZhongAn. In 2016, 6 of the 22 VC-backed Fintech unicorn startups valued at $1 billion or more, globally, were from mainland China.
Billion Dollar Fintech Funds
Earlier this year, a state-backed and privately-funded Fintech fund launched with a mammoth investment pool of 10 billion yuan (approx. $1.44 billion).
The “Asia Fintech Merger and Acquisition Fund of Funds” will focus on new technological innovations in payments and finance with a focus on blockchain companies and mobile payment firms among others.
In December, the multibillion-dollar Chinese investment firm Huiyin Group announced the launch of its bitcoin- and blockchain-specific subsidiary fund, called Huiyin Blockchain Ventures. At launch, the fund began with $20 million to invest in bitcoin and blockchain companies. The Chinese fund has previously invested in the likes of leading Indian bitcoin exchange Unocoin.
More recently, Credit China Fintech Holdings, a Hong Kong-based firm entered a $30 million agreement and investment in industry giant BitFury.
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