Total investments in fintech through acquisitions and mergers, private equity and Venture Capital (M&A, PE and VC) soared to a new record high in the first half of 2021. This is the conclusion of the biannual report "Pulse of Fintech" on trends in global fintech investment trends of the KPMG. Cash liquidity, increasing diversification across nodes and sub-sectors and strong activity around the world contributed to a record start for 2021. Funding increased from $87.1 billion in H2 2020 to $98 billion in H1 2021.

Fintech valuations remained very high in the first half of 2021. Investors continued to see the industry as attractive and well-performing. This is one possible reason for the explosion of unicorn companies, with 163 being created in the first half of the year.

Under the pressure of increasing the speed of their digital transformation and enhancing their digital capabilities, companies recorded particular activity in business deals. They participated with around EUR 21 billion. dollars in investments in more than nearly 600 deals worldwide. Many were those who realized that the fastest way is through cooperation, investment or acquiring fintech.

"Total investment in fintech climbed to all-time highs in the first half of 2021. Investors, particularly VC companies and investors, have bet on market leaders in many jurisdictions and in almost all subsectors," comments by Ian Pollari,Global Fintech Co-Lead of KPMG. "Large rounds of funding, high valuations and successful introductions confirm the theory that the digital customer engagement that accelerated during the pandemic is here to stay."

Investments go beyond €42.1 billion dollars in the U.S. and $51.4 billion. dollars on the American continent

General investment in fintech in the US remained dynamic in the first half of 2021, reaching €42.1 billion. dollars. VC investments in the U.S. were particularly strong, surpassing the 2020 record of $22 billion. Dollars. The first half of 2021 touched EUR 25 billion dollars. Some of the big deals were to raise €3.4 billion. dollars from Robinhood. Also EUR 600 million dollars from Stripe and $500 million. dollars from each of Better, ServiceTitan, and DailyPay.

The maturity of the fintech industry was evident in the strong import activity in the US. These include Affirm's successful IPO, the immediate introduction of Coinbase, the merger of SoFi's SPAC (special purpose acquisition companies) with Social Capital Hedosophia Holdings Corp. V. Also the merger of SPAC of Clover Health in the insurtech sector with Social Capital Hedosophia Holdings III.

On the American continent in general, investment in fintech has also been very strong, reaching EUR 51.4 billion. dollars. VC investments amount to €31 billion. dollars of the total, breaking last year's previous annual record of $24 billion. Dollars. Ongoing innovations in financial technology, coupled with the rapid growth in the use of digital services , has made fintech one of the most active investment sectors, both at the VC and M&A level.

The global trend of corporate investment growth was particularly noticeable in the Americas in the first half of 2021. Investments amounted to €12.8 billion. dollars in the first half of the year. Throughout the whole of 2020, they reached €11.4 billion. dollars.

Fintech investment in Europe breaks all records

Total fintech investments in the Europe, Middle East and Africa region continued to grow, with investments of more than €39 billion. in the first half of 2021, compared to an annual total of $26 billion. dollars in 2020. The region also shattered its previous annual high in VC investments by focusing on fintech. It recorded investments of €15 billion. in the first half of 2021, compared to $9 billion. dollars during the whole of 2020.

The UK at the top

The UK was at the top, with investments in fintech worth €24.5 billion. dollars, including a $14.8 billion M&A deal. dollars from Refinitiv, with the Scandinavian countries ($4.8 billion), Germany ($2.5 billion) and France ($2 billion) following. EUR 4.8 billion dollars in total fintech investments in the Scandinavian countries were the result of three major deals in Sweden. The €2.6 billion acquisition of the trading platform Itiviti by Broadridge Financial Solutions, and two rounds of funding totalling €1.9 billion. of Klarna, an after-purchase payment company.

Record investment in the EMEA region

In the first half of 2021, in the Europe, Middle East and Africa region, a much wider range of fintech hubs attracted greater investment than in the past, from private equity investments of €800 million. dollars to Group 42, headquartered in Abu Dhabi, and the $600 million PE acquisition. Irish Fenergo's dollars, at +100 million. dollars of VC funding rounds in the Netherlands (Mollie, Bunq), France (e.g. Ledger, Market Pay, Shift Technology, Alan, and others), Austria (BitPanda), the Czech Republic (Twisto) and Saudi Arabia (Tamara).

In the EMEA region, VC investments soared to an all-time high of €5.2 billion. in the first half of 2021. In the course of 2020, investments had reached €5.1 billion. dollars.

Recovery for total investment in the Asia Pacific region in the first half of 2021

Total investments in fintech (M&A, VC and PE) and deal activity in the Asia-Pacific region recorded a strong recovery in the first half of 2021. The first half of 2020 saw a drop to €4.7 billion. dollars through 357 transactions. In the first half of the year, they stood at €7.5 billion. dollars through 467 transactions -largely due to the activity of PE.

India at the top

At the top was India, with EUR 2 billion. dollars in total fintech investments. They are followed by China ($1.3 billion) and Australia ($900 million). The top ten deals in the Asia-Pacific region reflect an incredible geographical dispersion in the first half. They include South Korea (toss), Indonesia (Gojek), India (Pine Labs, CRED and Razorpay and KreditBee), the Philippines (Mynt), Australia (86400) and China (MediTrust). This diversification underscores the ongoing evolution and maturation of fintech hubs in the region.

Platforms with strong fintech services remained very attractive in the Asia-Pacific region. Gojek, headquartered in Indonesia, raised €300 million. dollars in the first half of 2021. At the same time it announced a merger with the payment and e-commerce platform Tokopedia.

Given the explosion of SPACs in the US in recent months, startups - including mature fintechs - in the Asia Pacific region are expected to garner more interest than US SPACs in the next six months. Grab, a Singapore-based super-app company has announced the largest SPAC merger ever recorded. An agreement worth EUR 30 million with the American Altimeter Growth, expected to be completed in the second half of 2021.

Strong prospects

Looking ahead to the second half, investment is expected to remain particularly strong in most parts of the world. The payments sector is expected to remain dominant among fintech investments. However, revenue-based financing solutions, banking-as-a-service models and B2B services are expected to attract increased levels of investment. Given the increase in digital transactions and the subsequent increase in cyberattacks and ransomware, cybersecurity solutions are likely to be high on investors' radars as well.

"Fintech is an incredibly popular area of investment right now. This is not expected to change anytime soon, given the increased number of fintech hubs attracting investment and trading of increasing sizes and valuations," comments Anton Ruddenklau, Global Fintech Co-Lead of KPMG. "As we head into the first half of 2021, we expect more consolidation, especially in mature areas of fintech. Fintechs seem to dominate the market either regionally or globally."

First semester — Key points

• Global investment in fintech reached €98 billion. dollars through 2,456 deals in the first half of 2021. They far exceeded last year's annual total of EUR 121.5 billion. dollars through 3,520 deals.
• M&A deals continued at a very healthy pace, amounting to €40.7 billion. dollars through 353 deals in the first half. In the whole of 2021, the amount of the agreements amounted to €74 billion. dollars through 502 deals.
• Advanced-stage venture capital valuations more than doubled year-on-year. Global average preliminary estimates for advanced stage agreements increased. Of the EUR 135 million, dollars in 2020, reached 325 million. dollars at the end of the first half of 2021.
• VC corporate participation in fintech was particularly strong in the first half. Global investment amounted to €20.8 billion. dollars. Both the Americas ($13 billion) and the Europe, Middle East and Africa region ($5 billion) recorded record levels in corporate venture capital (CVC) investments.
• Global investment in cybersecurity touched a new annual record in the middle of the year. They increased from EUR 2.2 billion. dollars in 2020 to more than 3.7 billion. dollars in the first half of 2021.
• Cross-border M&A activity has been significantly strengthened. Of the €10.3 billion dollars in the course of 2020 reached 27.2 billion. dollars only in the first half of 2021.
• Private equity, turned to the fintech industry in the first half of 2021, contributing €5 billion in investments. Dollars. The previous annual high of €4.7 billion dollars was recorded in 2018.

Investments in fintech

• Total investment in fintech in the Americas showed great potential. More than €51 billion dollars were directed to investments through 1,188 deals.
• The Europe, Middle East and Africa region recorded investments of €39.1 billion. Dollars in fintech. This includes a record EUR 15.1 billion. dollars from VC funding.
• Fintech investment in the Asia-Pacific region continued at a softer pace. have reached EUR 7.5 billion. dollars through 467 deals, versus $13.4 billion. dollars through 714 deals in 2020.