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Global WealthTech Investment Increased Nearly 5x Since 2014

Capital raised by WealthTech companies reached $4.6bn across 220 deals in 2018. This was an increase of 65.9% from the previous year. There were 27 transactions valued at $50m or above which collectively raised $2.7bn, as opposed to only 13 deals in this bracket in 2017 which raised approximately half of this amount.

The biggest deal last year was Robinhood’s $363m Series D round. The Menlo Park-based startup offers commission-free trading for stocks, ETFs, options and cryptocurrencies all available in one platform. The funding round in March last year was led by DST Global, a venture capital firm specialising in late stage investments. Venture capital firms Kleiner Perkins, Sequoia Capital, CapitalG and investment firm ICONIQ Capital also participated. Robinhood plans to use the capital injection to expand product line-up. The second largest funding round in 2018 was $250m raised by Revolut in a Series C round. The London-based challenger bank, which was valued at £300m in 2017, reached unicorn status with the funding round valuing the company at £1.2bn. Currently, the neobank has more than two million customers globally and said in a press release last year that it is signing up between 6,000 and 9,000 new users each day. Deal activity in the WealthTech sector, which peaked in 2016 with 281 deals, declined 21.7% to 220 deals last year.

The share of WealthTech deals in North America has decreased by nearly a quarter since 2014

Companies in North America attracted a smaller share of transactions every year from 2014 to 2017, going from 54.8% to 38.0% during this period. Although, this share increased slightly, by 3.4 pp last year, it is clear that the US is loosening its hold on the global WealthTech market as FinTech hubs start to form in other regions around the world. Additionally, apart from the previously mentioned Robinhood deal, none of the top 10 WealthTech transactions in the last five years were raised by companies based in North America.

Each of the other three regions, Europe, Asia and Rest of World, have increased their share of deal activity since 2014. Companies based in Europe attracted 38.3% of the total deals in 2017, the highest deal share of any region that year. In every other year since 2014 the share of deals in Europe has been second only to North America. Companies in Rest of World attracted 8.2% of total deals last year, a 2.3 pp increase from 2014. Out of all the WealthTech transactions completed in Rest of World across the last five years, 47.3% were raised by startups based in Australasia and 32.4% were raised by South America- based companies. Additionally, one of the top 10 deals globally since 2014 was completed by a company based in that region. Sao Paulo-based challenger bank Nubank raised $150m in a Series E round in March last year. The funding round was led by the previously mentioned DST Global and CEO David Velez said the new capital would “serve to further strengthen our balance sheet to support the accelerated growth we have seen since launch.“

 

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