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VC Investment In The U.S. Remains Strong At $32.6 Billion In Q1′ 2019 With Unicorn IPOS Looming: KPMG Report

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Venture Capital (VC) investment in the U.S. continued performing at a high level during Q1 ’19 with $32.6 billion invested as the U.S. economy remained strong, and increased IPO activity set the stage for further investment at all points of the deal spectrum — from early stage to late stage, according to KPMG’s Venture Pulse Q1′ 2019 report.

The largest deals in Q1’19 included a $5 billion raise by shared-space provider The We Company (formerly WeWork), and a $1 billion raise by freight logistics company Flexport – earning that company coveted unicorn status.

“In the past five years, the number of U.S. unicorns has more than doubled to over 160 as private capital is readily available allowing companies to stay private longer,” said Brian Hughes, National Co-leader, KPMG Venture Capital practice in the U.S. “We finally saw some unicorns choosing to go public in late 2018, and this unicorn IPO trend is expected to continue well into this year, spurred by recent high profile offerings and the ongoing strength of the public markets.”

Lyft hosted a successful IPO on Nasdaq in late March, raising $2.3 billion to value the company at $24 billion. It is the first in a line of large IPO unicorns expected in 2019, with ride-hailing company Uber also expected to file publicly, amongst others. The good performance of these unicorn companies in the early part of 2019 will trigger more investor interest in mature unicorns later in the year, in addition to providing additional capital for early stage deals.

U.S. investors continued to invest in established verticals in Q1’19, including food-delivery, healthcare and transportation, while mega-funds gained a significant amount of attention, coupled with strong activity in smaller-size funds.

Growth and Innovation Occurring Beyond Silicon Valley
The report found a growing boom of VC investment outside of Silicon Valley and the West Coast. In 2018, while 39 percent of VC deals occurred on the West Coast, 20 percent occurred in the Mid-Atlantic region, 9 percent in New England, and 9 percent in the Great Lakes region. These numbers reflect the growing number of innovation hubs appearing in cities such as New YorkBoston and others –a trend continuing this year.

In Q1’19, New York and New Jersey both attracted big deals, such as The We Company’s $5 billion raise, and Knock’s $400 million raise.

Among companies headquartered in Silicon Valley, there has been a shift toward scaling outside of the Valley in order to access or attract talent and better manage labor and space costs. Late in 2018, for example, Slack announced a new Denver Office, while other companies set up offices in ArizonaSalt Lake City and beyond. This trend is only expected to continue as companies look to balance a presence in the Valley with the need to scale and grow efficiently.

Digital Banking Heats Up
The digital banking space in the US continued to gain traction in Q1’19.  Chime’s Q1’19 $200 million raise earned it unicorn status, with a number of non-U.S.-based banks voicing plans to raise capital to fund a U.S. expansion.

The U.S. is well positioned for growth
The maturing fintech sector is also expected to see more M&A activity as companies are looking for scale and consolidate market share. In Q1’19, FIS announced plans to acquire Worldplay in a $34 billion deal.

“The story in the U.S. continues to be very positive.  The 2018 IPOs generally performed very well and the pre-public companies that have completed financings recently have been at high valuations,” said Conor Moore, National Co-Lead Partner, KPMG Venture Capital practice in the U.S. “This should encourage greater investment at all points on the investment spectrum from seed to late stage.”

 

SOURCE KPMG LLP

Fintech

Central banks and the FinTech sector unite to change global payments space

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The BIS, along with seven leading central banks and a cohort of private financial firms, has embarked on an ambitious venture known as Project Agorá.

Named after the Greek word for “marketplace,” this initiative stands at the forefront of exploring the potential of tokenisation to significantly enhance the operational efficiency of the monetary system worldwide.

Central to this pioneering project are the Bank of France (on behalf of the Eurosystem), the Bank of Japan, the Bank of Korea, the Bank of Mexico, the Swiss National Bank, the Bank of England, and the Federal Reserve Bank of New York. These institutions have joined forces under the banner of Project Agorá, in partnership with an extensive assembly of private financial entities convened by the Institute of International Finance (IIF).

At the heart of Project Agorá is the pursuit of integrating tokenised commercial bank deposits with tokenised wholesale central bank money within a unified, public-private programmable financial platform. By harnessing the advanced capabilities of smart contracts and programmability, the project aspires to unlock new transactional possibilities that were previously infeasible or impractical, thereby fostering novel opportunities that could benefit businesses and consumers alike.

The collaborative effort seeks to address and surmount a variety of structural inefficiencies that currently plague cross-border payments. These challenges include disparate legal, regulatory, and technical standards; varying operating hours and time zones; and the heightened complexity associated with conducting financial integrity checks (such as anti-money laundering and customer verification procedures), which are often redundantly executed across multiple stages of a single transaction due to the involvement of several intermediaries.

As a beacon of experimental and exploratory projects, the BIS Innovation Hub is committed to delivering public goods to the global central banking community through initiatives like Project Agorá. In line with this mission, the BIS will soon issue a call for expressions of interest from private financial institutions eager to contribute to this ground-breaking project. The IIF will facilitate the involvement of private sector participants, extending an invitation to regulated financial institutions representing each of the seven aforementioned currencies to partake in this transformative endeavour.

Source: fintech.globa

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TD Bank inks multi-year strategic partnership with Google Cloud

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TD Bank has inked a multi-year deal with Google Cloud as it looks to streamline the development and deployment of new products and services.

The deal will see the Canadian banking group integrate the vendor’s cloud services into a wider portion of its technology solutions portfolio, a move which TD expects will enable it “to respond quickly to changing customer expectations by rolling out new features, updates, or entirely new financial products at an accelerated pace”.

This marks an expansion of the already established relationship between TD Bank and Google Cloud after the group previously adopted the vendor’s Google Kubernetes Engine (GKE) for TD Securities Automated Trading (TDSAT), the Chicago-based subsidiary of its investment banking unit, TD Securities.

TDSAT uses GKE for process automation and quantitative modelling across fixed income markets, resulting in the development of a “data-driven research platform” capable of processing large research workloads in trading.

Dan Bosman, SVP and CIO of TD Securities, claims the infrastructure has so far supported TDSAT with “compute-intensive quantitative analysis” while expanding the subsidiary’s “trading volumes and portfolio size”.

TD’s new partnership with Google Cloud will see the group attempt to replicate the same level of success across its entire portfolio.

Source: fintechfutures.com

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MAS launches transformative platform to combat money laundering

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The MAS has unveiled Cosmic, an acronym for Collaborative Sharing of Money Laundering/Terrorism Financing Information and Cases, a new money laundering platform.

According to Business Times, launched on April 1, Cosmic stands out as the first centralised digital platform dedicated to combating money laundering, terrorism financing, and proliferation financing on a worldwide scale. This move follows the enactment of the Financial Services and Markets (Amendment) Act 2023, which, along with its subsidiary legislation, commenced on the same day to provide a solid legal foundation and safeguards for information sharing among financial institutions (FIs).

Cosmic enables participating FIs to exchange customer information when certain “red flags” indicate potential suspicious activities. The platform’s introduction is a testament to MAS’s commitment to ensuring the integrity of the financial sector, mandating participants to establish stringent policies and operational safeguards to maintain the confidentiality of the shared information. This strategic approach allows for the efficient exchange of intelligence on potential criminal activities while protecting legitimate customers.

Significantly, Cosmic was co-developed by MAS and six leading commercial banks in Singapore—OCBC, UOB, DBS, Citibank, HSBC, and Standard Chartered—which will serve as participant FIs during its initial phase. The initiative emphasizes voluntary information sharing focused on addressing key financial crime risks within the commercial banking sector, such as the misuse of legal persons, trade finance, and proliferation financing.

Loo Siew Yee, assistant managing director for policy, payments, and financial crime at MAS, highlighted that Cosmic enhances the existing collaboration between the industry and law enforcement authorities, fortifying Singapore’s reputation as a well-regulated and trusted financial hub. Similarly, Pua Xiao Wei of Citi Singapore and Loretta Yuen of OCBC have expressed their institutions’ support for Cosmic, noting its potential to ramp up anti-money laundering efforts and its significance as a development in the banking sector’s ability to combat financial crimes efficiently. DBS’ Lam Chee Kin also praised Cosmic as a “game changer,” emphasizing the careful balance between combating financial crime and ensuring legitimate customers’ access to financial services.

Source: fintech.global

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