Fintech Investment in China Hits $1.3 billion

KPMG’s Pulse of Fintech – a report evaluating fintech investment trends twice a year – revealed a total investment of over $1.3 billion in H1’21 in China. This is the best result since H2’19 and a $400 million growth from $900 million since H2’20. Despite the fact that there were no major VC agreements in China in H1’21, the $100 million+ VC deals that did occur demonstrate the rising range of fintech businesses attracting capital.

In H1’21, major parties – raising the most funding – included medical payments company MediTrust Health ($155 million), wealth tech WeBull ($150 million), asset data management firm Xuncetech ($108 million), and B2B solutions provider XforcePlus ($100 million).

“China’s fintech market is incredibly mature next to many other jurisdictions, with investments in areas like payments really taking off a few years ago and a number of clear leaders emerging. Now what we’re seeing isn’t megadeals in those very mature areas, but rather an increasing number of smaller deals focused on less mature sectors of fintech — like B2B services, wealth tech, and insuretech,” says Andrew Huang, Partner and Fintech Leader, KPMG China.

Cryptocurrencies and crypto exchange are still among the highly funded areas, with Amber Group raising $100 million and Babel Finance collecting $40 million in H1’21. VC funds also showed high interest in the entire blockchain ecosystem. Over the coming year, regulations to implement licensing standards are expected. This could have an impact on crypto investments as well as Hong Kong’s standing as Asia’s blockchain capital.

Barnaby Robson, Partner, Deal Advisory, KPMG China says: “Hong Kong has become a center and talent pool for blockchain and crypto in Asia. It’s an incredibly hot space for investment — and I expect to see significant M&A activity as CeFi players look to acquisitions to expand capabilities, and investors seek to tap into one of the most exciting and fastest-growing asset classes.”

Total fintech investment is predicted to continue strong in most regions of the world in H2’21. The payments space is expected to continue driving fintech investment, but revenue-based financing solutions, banking-as-a-service models, and B2B services are also growing steadily. Cybersecurity is predicted to gain significant ground, with the increase of digital transactions and subsequent cyberattacks and ransomware.