According to the KPMG study The volume of all venture capital, M&A, and private equity investments in fintechs rose to $98 billion in the first half of 2021. 2,456 deals were completed worldwide. By comparison, $121.5 billion was invested in 3,520 deals in 2020 as a whole. Global VC investments rose particularly sharply in the first half of this year, reaching $52.3 billion – more than double the amount in the second half of 2020 ($22.5 billion) and almost as high as the total value in the previous record year of 2018 ($54 billion).
Bernd Oppold, Partner in the Financial Services division of KMPG, states:
"Total investment in fintechs rose to a record high in the first half of 2021, as investors, particularly established market players and VC investors, bet heavily on fintech leaders across almost every subsector. Under pressure to accelerate their digital transformation, companies have been particularly active in venture deals. Many are realizing that they can greatly accelerate the pace of their digital transformation by collaborating with, investing in, or acquiring fintechs."
2.5 billion dollars for German fintechs
In Germany, investments in fintechs rose to a total of $2.5 billion in the first half of 2021. This was primarily due to the increase in venture capital investments, which were higher than in the entire year of 2020. This was primarily due to two financing rounds in the first half of the year: the capital increase at online broker Trade Republic (with $900 million), followed by digital insurer Wefox (with $650 million). Together, the two startups account for more than half of the investments in the German fintech scene.
However, Oppold sees the market on the right track:
"Fintechs in Germany are now taking their products and services to the next level. Many began by developing front-end technologies. We are now seeing them increasingly penetrating regulated areas to better compete with established financial service providers – with the result that they must focus more on building their regulatory infrastructure and developing new products and innovative solutions."
Looking ahead to the second half of the year, KPMG expects fintech investments to remain very robust in most regions of the world. While payments are expected to remain a dominant driver of fintech investments, yield-based financing solutions, banking-as-a-service models, and B2B services are likely to increasingly attract investment.
