In the third quarter of 2016, Asian companies received the largest bulk of the total venture investments in fintech sector. However, blockchain and crypto startups are not among the leaders.
The value of VC investment in Asian fintech increased from $800 million in the second quarter of 2016 to $1.2 billion in the third quarter, a report of the global audit firm KPMG states. In contrast, the total value of fintech VC funding in the world has dropped by more than 50% over a year, from $5 billion in the third quarter of 2015 to $2.4 billion.
The second place in the rating is occupied by North American fintech firms with $0.9 billion of VC funding from July to September. European companies are at the third place with $0.2 billion.
The report covers equity transactions to venture capital-backed fintech companies globally, including such areas as payments and lending, personal finance and wealth management, crowdfunding, blockchain, data and analytics, and InsurTech.
Fintech sector in China has been the most successful with over $1 billion of investments over the third quarter. Other jurisdictions that have gained the most from global investors are Hong Kong, Singapore, Australia and India.
Overall, the peak investment level was reached in the second quarter of 2015, with $5.2 billion of VC funding in the fintech sector worldwide.
Venture investments in blockchain and cryptocurrency projects, however, continue to demonstrate signs of market saturation. These companies have attracted less VC funding from the beginning of this year comparing with the same period in 2015. In the first quarter of 2016, the blockchain market received $153 million of VC investment. The third quarter saw a decrease in funding with only $87 million invested in the blockchain.
The major share of funding in this sector went to US companies with seven deals at the total of $77.2 million. The biggest deals were investment rounds of Ripple ($55 million) and Coinbase ($10.5 million).
The blockchain sector may be put under a closer scrutiny as investors are getting more careful in their estimations as of when and if investments will deliver returns, the report says. They are more concerned now about the ability to move blockchain projects from proof-of-concept to adoption and production. “Over the next year, investors will make more rational assessments of where the main use cases associated with fintech are and how long it will be before they are implementable,” the report predicts.