“Late-stage deals accounted for a significant proportion of VC investment as mature fintechs continued to attract large funding rounds,” KPMG said.
Many of the deals observed in H1’20 stemmed from deal-making processes that began in late 2019; with the onset of COVID-19, new deal activity has slowed dramatically, except in high-priority sectors such as payments. Platform businesses also continued to enjoy strong interest in the first half of 2020, from both investors and large tech firms, especially in markets where fintech isn’t as mature.
M&A activity, meanwhile, decelerated across all regions on the world as the mega M&A activity that marked 2018 and 2019 appeared to stall. Global M&A deals accounted for US$4 billion during the first half of 2020, representing a significant gap from the whole-2019 record of US$85.7 billion.
KPMG predicted that over the second half of the year, COVID-19 will continue to be a key driver of change for fintech investment, as digital trends such as the use of contactless payments and demand for digital-service models persist.
Those forces are expected to continue powering investment not just in direct fintech solutions, but also in related enabling activities such as cybersecurity, fraud prevention, and digital identity management. Notably, global investment in cybersecurity accelerated past the US$592.3 million record set in 2019, amounting to US$870.8 million in the first half of this year alone.
