Fintech Attracts Record-Breaking VC Investments in H1 of 2021

Global venture capital investment in fintech reached $52.3 billion in the first six months of 2021, hitting a record high and more than doubling the $22.5 billion invested during the same time last year. 

According to KPMG’s Pulse of Fintech H1'21 report, the total global fintech investment activity from mergers and acquisitions, private equity, and venture capital soared to $98 billion. For comparison, 2020’s fintech deal volume was $121.5 billion on the global level. Pandemic-induced digital acceleration, dry powder cash reserves, accelerated diversification in subsectors and hubs, and robust activity in almost all corners of the world fueled the record start to 2021. 

“Fintech is an incredibly hot area of investment right now - and that’s not expected to change anytime soon given the increasing number of fintech hubs attracting investments and growing deal sizes and valuations,” said KPMG’s Global Fintech Co-Lead Anton Ruddenklau. “As we head into H2 2021, we anticipate more consolidation will occur, particularly in mature fintech areas as fintechs look to become the dominant market player either regionally or globally.”

As per the largest venture capital rounds of H1 2021, the list includes the US-based Wealthtech Robinhood, which received $3.4 billion in funding, two rounds amounting to $1.9 billion in total for the Sweden-based personal loan provider Klarna, and $1.5 billion for Brazil-based Nubank. Germany’s wealth tech Trade Republic raised $900 million, while Toss, a mobile financial app headquartered in South Korea, received $410 million in Asia’s largest VC round during the six-month period.

With fintech valuations at record-breaking levels, funding providers remained interested in the space, which was a likely driver for the explosion of unicorn births. During the first six months of 2021, 163 startups valued at over $1 billion sprung up. 

Feeling pressure to accelerate their digital transformation, corporate investors were very active in venture deals, taking part in approximately 600 deals globally and making up for almost $21 billion in investments.

In the second half of the year, the fintech investment volume is expected to increase further in most parts of the world. While the payments space is expected to keep driving fintech investment, the future is also bright for B2B services, cybersecurity solutions, banking-as-a-service models, and revenue-based financing solutions.