Huge increases in Fintech investment
It has to be said that 2017 has been a pivotal year so far for Fintech; the year when it really captured the minds of a multitude of investors ranging from the big institutions to the individual who maybe just has a few hundred dollars to put into a fintech startup via an Initial Coin Offering (ICO) and make a profit.
Research from Global Data shows that the average size of funding rounds for fintech startups increased to $5m, which is 23 percent higher than in 2016. Its press release also noted, “It is evident from the rise in investments that a lot of new ideas are getting funded in the fintech space, thereby offering a good scope of innovation and disruption.”
First round funding attracts more investors
It is also evident that investors are showing much more enthusiasm for the first round of funding a startup; that’s when the big money flows in. In the earlier days of ICOs, a startup may have undertaken several rounds of funding, but these multiple rounds are falling out of favour, with only four percent of ICOs straying into this territory.
Such is the enthusiasm for first round fintech ICOs that some of them have raised millions in minutes during 2017. Investors have realised that getting in at the beginning with these ‘first mover’ products and platforms is the key to making spectacular profits.
Global finance community embraces Fintech
CoinTelegraph, one of the respected sources dedicated to Fintech news, reports that Fintech is rapidly becoming the main conversation in the global finance community as it realises the potential of the blockchain to make banks more competitive by enabling them to reach a swathe of customers who previously had no little or no banking access, and provide alternatives to traditional legacy systems.
Europe and Asia Fintech outpaces USA
Global Data also revealed that the pace of change in Fintech is speeding up outside the U.S., which was once a leader in Fintech startups, but is now facing stiff competition form Europe and Asia. It said, “The other markets are steadily grabbing the share from the US, thereby reducing its dominance from a nearly 60 percent share in 2014 to about 43 percent in 2017.” This is supported by reports from Wharton Business School following a recent Fintech conference for the U.S. banking community, which said that the UK and Singapore governments were looking at a variety of cryptocurrency solutions, whereas American bankers were more wary of this aspect of Fintech. Similarly, countries where there is less confidence among citizens in the fiat currency are looking ripe for increasing interest in cyrpotcurrencies and coin exchanges. India is a good example of this. After Prime Minister Modi’s cash reforms in 2016, which banned some of the country’s circulating currency, led to an eruption of interest in Bitcoin and other digital currencies, because of the government restrictions.
These are good times for Fintech investment, and as proof of that CBS Insights included 13 blockchain businesses in its 250 Startups list of emerging Fintech companies. These included Ripple, which offers an alternative to the bank Swift system for international transfers. Coinbase and Brave, the latter founded by the creator of Mozilla, are both cryptocurrency exchanges that have been working hard to improve the consumer experience with buying, selling and storing cryptocurrencies.
Not even China’s ban on ICOs has stopped the rise in interest in investing in Fintech startups and blockchain technology, indeed, CNBC reported that it will improve the market, and industry insiders believe that the Chinese ban will eventually be repealed. Meanwhile, in the rest of the world, Fintech is revving up for an even better year in 2018.