New research shows that fintech funding in Hong Kong more than doubled in 2017 compared to the previous year.
Data from Accenture analysis of data from CB Insights, a global venture-finance data and analytics firm, shows that fintech funding rose to US$545.7 million in 2017 from US$215.5 million in 2016 and US$107.5 million in 2015, according to a report from the South China Morning Post.
Last year saw the biggest fundraising in Hong Kong by WeLab, a peer to peer lender, which raised US$220 million in November. According to Musheer Ahmed, interim general manager of the FinTech Association of Hong Kong, there have been two developments in the past two years that has made Hong Kong attractive to investors.
Banks went from being skeptical about fintech, to realising it can be beneficial to them. Following on from this, they moved from reviewing proofs of concept to actual implementation and adoption of fintech solutions, meaning start-ups now have a steadier revenue stream, making them more attractive.
The second development, he said, was that the government and regulators were actively pushing for innovation across sectors.
Notably, Paul Chan, Hong Kong’s financial secretary, said in his 2018 budget speech that he would allocate HK$500 million (US$63.9 million) for the development of financial services within the next five years. This will help to provide support for bond market development, fintech, green finance, manpower training, and other areas of the sector.
This boost in fintech funding within Hong Kong has meant that is has surpassed the likes of Singapore and Australia. According to data from Accenture, since 2010, Hong Kong has raised US$940 million. This is compared to the US$387 million raised by Singapore-based start-ups and US$714 million for those in Australia.
Interestingly, while Chinese fintech funding experienced a decline last year the number of deals was up. Figures show that in 2016 there were 54 deals in China, which amounted to $10 billion. However, last year saw 146 deals taking place, worth $2.8 billion.
Adrian Seto, Accenture’s senior director, innovation & fintech for the Asia-Pacific, explained:
You’re talking about a more active ecosystem, which is actually better. As an investor, you’re de-risking by spreading your money into different deals, the quintessential ‘not putting all your eggs into one basket.’
Global investment in fintech companies reached a record high of US$27.4 billion, in 2017, a rise of 18 percent year on year.
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