Fintech Decoded a Special Edition Report Tracking Investment Activity in Fintech Companies 1Q-2020 CONTENTS

Fintech Decoded A special edition report tracking investment activity in fintech companies 1Q-2020 CONTENTS

01 GLOBAL

2020 has a stellar start; but global crisis expected to slow down funding activity Another quarter of robust late-stage deal activity; number of early-stage deals continues to decline 02 AMERICAS After two record-setting years, the pandemic effect likely to subdue deal activity in 2020 Large decline in late-stage median deal size on account of several small size investments Mega deals boost funding in Lending and Payments 03 EUROPE Fintech funding in Europe registers a great quarter in 1Q-2020, crisis impact not yet reflected Explosive growth continues in late-stage funding Payments remains most promising vertical in Europe 04 ASIA VC funding in Asia continues to slump Late-stage fares better than early stages in 1Q 2020 Funding declines steeply in all main verticals Executive Summary

Fintech companies in the lending segment may have to brace for a double whammy as retail and SME Welcome to the third edition of Aranca’s borrowers struggle to repay loans because of tightening cashflows and investors turn wary about infusing ‘Fintech Decoded’ report, a publication more capital into these setups. However, massive government stimulus programs may present an where we highlight key trends in VC opportunity for fintech companies as traditional banks with their legacy systems could find it difficult to funding within the broader fintech universe distribute the cash to small business owners with the speed that the situation demands. How government across critical markets in 1Q-2020. assistance will support the lending companies is yet to be mapped out. As consumers and businesses become more acclimatized to the new reality and are forced to reshape behaviors, we expect new After years of record funding levels, the prospects for fintech firms to accelerate their growth and initiate the transition towards a digital economy. surge in mega-rounds, and sky-rocketing The Payments segment, which remains the largest receiver of investments in the fintech space, may be valuations, is set to change due to the looking at a seismic reaction as consumers increasingly opt for contactless payments. The economic coronavirus pandemic. The funding conditions and continuing social distancing protocols will soon hit PropTech companies hard. environment that supported companies in The ensuing hardships are likely to push traditional banks and financial institutions to actively seek growth by fueling in millions for customer partnerships with fintech companies to accelerate their digital transformation. acquisition no longer exists. In this report, we highlight some early trends, based on We expect the crises to last until Q3 2020, after which recovery would take at least 12–18 months, if we go Q1 deal activity and the outlook for by the experience of the last financial crisis. Many fintech companies are understandably focused on responding to the current uncertainty by implementing cost-effective measures. Their ability to swiftly, different fintech verticals. innovatively leverage their unique technology platforms will be crucial at this time; these efforts will be We hope you will find this an interesting reflected in the upcoming quarters. and insightful read. Executive Summary

The COVID-19 pandemic will undoubtedly have lasting effects on overall deal activity during the year. The fintech sector anticipates stress on multiple fronts, yet also sees new opportunities for fintech companies that move fast enough to seize them.

The 1Q-2020 investment deal activity data based on Pitchbook indicates that this quarter may have just escaped the full impact of the pandemic. Deals already negotiated in late Q4 2019 and the early part of 1Q-2020 reached closure. In the 12 months ended March 2020, venture capital deal volume declined by 12% (YoY) and total capital invested declined by 21% (YoY), recording $29.1B in funding over 1,188 deals.

As the funding environment deteriorates, early-stage fintech companies will find fundraising extremely challenging as investors turn more cautious about allocated capital and would prefer to back firms with more definitive business models.

As the global fight against the COVID-19 outbreak continues, we expect the economic aftermath and slowdowns in economies to reflect in funding activity in all fintech verticals, although the scale and depth of challenges may vary widely. Fintech 335 deals 335 across $22.9B globallyclocked in fintech companies 1Q In - 2020, 2020, investment 2020 had a stellar start; however, global crisis slowed down funding activity marginally by end-1Q-2020

Global VC, PE, MA deal landscape in fintech companies January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified VC, PE, and M&A fintech funding saw a 1,708 1,634 significant surge in January 2020. There 1,489 1,503 1,333 was $25.8B worth of funding during this 14.0 month, driven by three big ticket deals, 1,206 each worth more than a billion dollars. 42.5 They included $14.3B of development capital given to HengFeng Bank in China, $5.3B in Visa’s acquisition of Plaid in the 126.9 US, and $2.4B in The Utmost Group of 95.5 93.7 362 Companies’ acquisition of Equitable Life 76.2 71.1 Assurance Society in the UK. 57.4 14.3

18.9 As expected, the COVID-19 outbreak led to a slump in deal activity in subsequent 2014 2015 2016 2017 2018 2019 1Q 2020 months decreasing it to $4.1B in February Capital Invested ($B) Ant Financial ($B) WorldPay ($B) 2020 and further to $3.3B in March 2020. HengFeng Bank ($B) Capital Invested 1Q 2020 Deal Count Deal Count 1Q 2020

Data Source: Pitch Book, unless specified otherwise Note: Please refer to the Methodology section at the end of the report to understand the fintech universe and its constituents as defined from the perspective of this report. Fintech 319 deals 319 across $7.2B globallyclocked in fintech companies 1Q In - 2020, 2020, VC funding Global VC activity continues to remain stable, but the future outlook is uncertain

Global VC funding in fintech companies January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified In line with the last three quarters of 2019, 379 395 337 334 333 356 332 330 347 333 296 306 307 293 306 310 321 296 319 1Q-2020 continued to remain strong. While 272 256 264 282 291 236 the deal volume noted a marginal increase, 14 8.8 8.5 5.2 6.3 5.9 6.2 6.1 8.3 7.5 7.2 the total capital invested declined and 4.7 4.4 4.5 4.4 5.0 5.0 2.2 2.2 1.6 3.3 2.8 3.0 3.2 3.2 6.6 median deal value saw not change in 1Q- Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2020. 2014 2015 2016 2017 2018 2019 2020 There were over 10 big deals announced Capital Invested ($B) Ant Financials Deal Count in March 2020 that were either cancelled or remained open at month end, 6.0 corroborating the uncertainty brought 4.7 4.9 4.7 5.0 5.0 5.0 3.9 3.2 3.0 3.5 about by the current crisis. 2.0 2.2 2.0 2.2 1.9 2.2 2.0 2.5 2.2 2.1 2.5 1.5 1.8 1.3 While the pandemic’s repercussions on fintech deal activity are expected to Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 materialize over the next few quarters, it 2014 2015 2016 2017 2018 2019 2020 would be interesting to see if funding in Median Deal Size ($M) fintech will slow down further, or if investors will place their bets on innovative

Data Source: Pitch Book, unless specified otherwise fintech companies that are promoting Note: Please refer to the Methodology section at the end of the report to understand the fintech universe and its constituents as defined digitalization and contactless operations. from the perspective of this report. Another quarter of robust late-stage deal activity; number of early-stage deals continues to decline

Global VC funding in fintech companies January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified Late-stage deal activity remained stable in Angel/Seed Early Stage VC Later Stage VC 1Q-2020, clocking over 15 mega deals (over $100M). Meanwhile, early-stage VC funding in 1Q-2020 saw the lowest capital 14.0 amount invested in 11 quarters and the 10.3 1.6 9.4 lowest number of deals in 20 quarters as 1.3 7.7 8.2 1.2 16.4 1.0 1.0 5.6 0.8 12.6 11.7 12.0 investors moved towards established 3.2 9.7 0.3 1.5 5.3 5.5 fintech solutions. 2014 2015 2016 2017 2018 2019 1Q 2014 2015 2016 2017 2018 2019 1Q 2014 2015 2016 2017 2018 2019 1Q 2020 2020 2020 A sharp decline in early-stage funding and 581 576 269 542 646 255 another growth quarter for late-stage 503 502 577 246 526 409 477 482 193 203 funding (with the highest number of deals 366 159 and total capital invested) validates the

109 hypothesis that the fintech space is

103 107 showing signs of maturity.

2014 2015 2016 2017 2018 2019 1Q 2014 2015 2016 2017 2018 2019 1Q 2014 2015 2016 2017 2018 2019 1Q 2020 2020 2020

Capital Invested ($B) Capital Invested 1Q 2020 ($B) Deal Count Deal Count 1Q 2020 Ant Financial ($B)

Global VC funding median deal size: By funding stage January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified

20.6 20.1 20.0

16.8

13.8 13.6 13.1

7.7 7.2 7.2

4.0 4.2 4.5 4.5

1.3 1.5 1.5 1.5 0.6 1.0 1.0

2014 2015 2016 2017 2018 2019 1Q 2020

Angel/Seed Early Stage VC Later Stage VC

Top 10 global VC funding deals in fintech January 01, 2020 – March 31, 2020

Deal Post Money S.no Region Name Verticals Key Investors Size ($M) Valuation ($B) Access Technology, Coatue, Dragoneer, DST Global, General Atlantic, ICONIQ 1 US Chime Payments+ 700 6.0 Capital, Menlo Ventures 2 UK Revolut Payments+ 500 Bond Capital, GP Bullhound, Ribbit Capital, TCV 5.5 Alta Park Capital, Bessemer Venture, Durable Capital, G Squared, Greenoaks 3 US Toast POS Business Solutions 400 4.9 Capital, Light Street Capital, TCV, Tiger Global, TPG Capital BCG Digital, CMT Digital, Goldfinch, Intercontinental Exchange, M12, Pantera 4 US Bakkt Wealth Management 300 - Capital, PayU, SGH Capital 5 US AvidXchange Business Solutions 260 TPG Sixth Street Partners 2 6 US Tradeshift Business Solutions 240 Gray Swan - 7 Sweden Klarna Payments+ 200 Commonwealth Bank of Australia 5.4 8 Australia Xinja Payments+ 160 Emirates World Investments - 9 US HighRadius Payments+ 125 Citi Ventures, ICONIQ Capital, Susquehanna Growth Equity 1.0 Accomplice VC, Anthemis, BNP Paribas, Goldman Sachs, GV, International Finance 10 UK CurrencyCloud Payments+ 122 - Corporation, Notion, Sapphire Ventures, SBI Holdings, Siam Commercial Bank, Visa

Data Source: Pitch Book, unless specified otherwise Note: Please refer to the Methodology section at the end of the report to understand the fintech universe and its constituents as defined from the perspective of this report. VC funding: Europe completes strongest quarter; numbers plummet in Asia

Global VC funding (no. of deals) in fintech companies January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified After a recording-setting year in 2019 for Americas Asia Europe both Americas and Europe, the future of fintech in 2020 remains uncertain due to the pandemic induced economic slowdown

14 which is expected to hit deal activity. Asian 5.6 15.4 13.6 fintech funding was already on a 3.8 9.6 3.5 8.1 7.7 10.5 2.4 downward trend in terms of value due to 6.1 6.8 7.2 1.7 1.9 4.0 1.4 6.1 5.2 1.6 1.0 region-specific factors and the outbreak

2014 2015 2016 2017 2018 2019 1Q 2014 2015 2016 2017 2018 2019 1Q 2014 2015 2016 2017 2018 2019 1Q has made it worse. 2020 2020 2020 827 Payments+ segment remains the most 685 714 238 674 215 624 616 212 201 413 attractive segment across regions, 363 147 294 287 300 accounting for over 45% of the total capital 114 252 invested in 1Q-2020.

180 51 77

2014 2015 2016 2017 2018 2019 1Q 2014 2015 2016 2017 2018 2019 1Q 2014 2015 2016 2017 2018 2019 1Q 2020 2020 2020

Capital Invested ($B) Capital Invested 1Q 2020 ($B) Deal Count Deal Count 1Q 2020 Ant Financial ($B)

Data Source: Pitch Book, unless specified otherwise Note: Please refer to the Methodology section at the end of the report to understand the fintech universe and its constituents as defined from the perspective of this report. In 1Q-2020, VC funding in fintech companies in North America clocked $3.9B across

Fintech 176 deals After two record-setting years, the pandemic effect likely to subdue activity in 2020

VC funding in fintech companies in North America January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified 792 Deal activity grew 6% in volume terms and

694 21% QoQ in value terms in 1Q-2020. 659 664 While projections based on the quarterly 608 597 performance suggest that 2020 could probably be the best year for North America’s VC funding space, the next few quarters are expected to bring about a 15.0 massive drop in funding activity as 13.0 176 countries battle the economic impact of the 9.5 pandemic, especially the US, which has 7.9 7.5 been the worst hit by COVID-19 as of April 6.1 2020. 3.9

2014 2015 2016 2017 2018 2019 1Q 2020

Capital Invested ($B) Capital Invested 1Q 2020 ($B) Deal Count Deal Count 1Q 2020

Data Source: Pitch Book, unless specified otherwise Note: Please refer to the Methodology section at the end of the report to understand the fintech universe and its constituents as defined from the perspective of this report. Another quarter of significant late-stage funding: 1Q-2020; Early-stage funding numbers continue to decline

North America VC funding (no. of deals) in fintech companies: By funding stage January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified Angel/Seed Early Stage VC Later Stage VC

5.5 9.5 1.0 4.8 6.3 6.6 0.6 0.6 0.7 0.7 3.1 0.5 2.6 2.6 4.1 4.2 4.3 1.4 2.8 0.1 1.0 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020

305 320 295 320 332 280 282 267 242 140 145 221 127 189 202 114 118 115

57 61 58

2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020

Capital Invested ($B) Capital Invested 1Q 2020 ($B) Deal Count Deal Count 1Q 2020

Data Source: Pitch Book, unless specified otherwise Note: Please refer to the Methodology section at the end of the report to understand the fintech universe and its constituents as defined from the perspective of this report. Large decline in late-stage median deal size on account of several small size investments

North America VC funding median deal size: By funding stage January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified 28.0

20.5 20.0

16.5 15.0 14.0

10.0 9.0 8.6 8.3 6.0 6.0 5.3 3.5 1.5 1.7 1.5 0.8 1.3 1.1 1.4

2014 2015 2016 2017 2018 2019 1Q 2020

Angel/Seed Early Stage VC Later Stage VC

Top 5 VC funding deals in fintech: North America January 01, 2020 – March 31, 2020

Deal Post Money S.no Region Name Verticals Key Investors Size ($M) Valuation ($ B)

Chime (Financial Access Technology, Coatue, Dragoneer, DST Global, General Atlantic, 1 US Payments+ 700 6.0 Software) ICONIQ Capital, Menlo Ventures

Alta Park Capital, Bessemer Venture, Durable Capital, G Squared, 2 US Toast POS Business Solutions 400 4.9 Greenoaks Capital, Light Street Capital, TCV, Tiger Global, TPG Capital

BCG Digital Ventures, CMT Digital, Goldfinch Partners, Intercontinental 3 US Bakkt Financial Markets 300 - Exchange, M12, Pantera Capital, PayU, SGH Capital

4 US AvidXchange Business Solutions 260 TPG Sixth Street Partners 2.0

5 US Tradeshift Business Solutions 240 Gray Swan -

North America VC funding in fintech: Lending, Payments January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified Lending The lending space in North America witnessed the lowest amount of funding in 112 111 103 107 132 97 1Q-2020 in over six quarters, whereas the Payments+ segment saw the highest-ever quarterly funding in North American history 3.5 3.7 with three mega deals (over $100M). 2.3 2.2 1.9 1.4 0.2 18 The economic slowdown has significantly

2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020 reduced consumer spending, resulting in fewer financial transactions. Demand Payments shocks have impacted payment 124 122 114 120 102 110 processors’ cash flows and could potentially bring a down-round for some.

3.4 On the flip side, people are increasingly 2.0 29 opting for cashless payments and digital 1.3 1.2 1.0 1.3 1.3 banking, a trend that could benefit the 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020 survivors of the current adversity.

Capital Invested ($B) Capital Invested 1Q 2020 ($B) Deal Count Deal Count 1Q 2020

Data Source: Pitch Book, unless specified otherwise Note: Please refer to the Methodology section at the end of the report to understand the fintech universe and its constituents as defined from the perspective of this report. RegTech likely to slump after record-setting deal activity in 2019

North America VC funding in fintech: RegTech January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified

0.4

0.2 0.2 0.2 0.2 0.1 0.1 2014 2015 2016 2017 2018 2019 1Q 2020

34 26 23 25 17 19

2014 2015 2016 2017 2018 2019 1Q 2020

Capital Invested ($B) Capital Invested 1Q 2020 ($B) Deal Count Deal Count 1Q 2020

Data Source: Pitch Book, unless specified otherwise Note: Please refer to the Methodology section at the end of the report to understand the fintech universe and its constituents as defined from the perspective of this report. Increased demand for blockchain-driven Insurance Tech start-ups during pandemic likely to bring in higher funding

North America VC funding in fintech: Insurance, Business Solutions January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified Insurance Business Solutions

1.8 1.7 2.0 2.1 1.7 1.1 1.3 1.2 1.2 1.2 0.7 0.7 0.3 0.5 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020

74 69 124 109 109 56 58 100 101 52 91

28 23 39

2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020

Capital Invested ($B) Capital Invested 1Q 2020 ($B) Deal Count Deal Count 1Q 2020

Data Source: Pitch Book, unless specified otherwise Note: Please refer to the Methodology section at the end of the report to understand the fintech universe and its constituents as defined from the perspective of this report. In 1Q-2020, VC funding in fintech companies in Europe clocked $1.9B across

Fintech 77 deals Fintech funding in Europe registers a great quarter in 1Q-2020

VC funding in fintech companies in Europe Europe registered its best quarter in the last January 01, 2014 – March 31, 2020 six years with a staggering $1.8B of VC Currency in $, unless otherwise specified 413 funding, driven by six mega deals (over $100M) during 1Q-2020. 363 The quarter also marks the highest number of mega deals registered till date. 294 300 287 Remarkably, all six deals were in the 252 Payments+ space, indicating the widespread adoption of digital payments and banking 5.6 solutions in Europe. 77 It will be challenging for fintech companies in 3.8 3.5 Europe to raise funds in the upcoming 2.4 quarters as key financial hubs, such as 1.6 1.7 France, Germany, Spain, and the UK, bear 1.9 the brunt of the coronavirus outbreak. However, regulatory framework on open 2014 2015 2016 2017 2018 2019 1Q 2020 banking and PSD2 demonstrate that fintech companies are the need of the hour as the Capital Invested ($B) Capital Invested 1Q 2020 ($B) Deal Count Deal Count 1Q 2020 world transitions to contactless and digital

Data Source: Pitch Book, unless specified otherwise ways, which may encourage VCs to remain Note: Please refer to the Methodology section at the end of the report to understand the fintech universe and its constituents as defined from the perspective of this report. bullish on fintech. Explosive growth continues in late-stage funding

Europe VC funding (no. of deals) in fintech companies: By funding stage January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified Angel/Seed Early Stage VC Later Stage VC

0.4 2.0 3.4 1.7 0.3 1.3 2.2 0.2 0.2 1.1 0.2 1.6 1.7 0.2 0.7 0.8 1.2 0.1 0.1 0.8 0.5 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020

169 157 195 67 143 61 58 159 124 146 133 96 121 87 101 35 27 30 27

27 23

2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020

Capital Invested ($B) Capital Invested 1Q 2020 ($B) Deal Count Deal Count 1Q 2020

Data Source: Pitch Book, unless specified otherwise Note: Please refer to the Methodology section at the end of the report to understand the fintech universe and its constituents as defined from the perspective of this report. Median deal sizes in late-stage companies peak at record levels

Europe VC funding median deal size: By funding stage January 01, 2014 – March 31, 2020

24.1

15.7 15.0

11.5 11.4 9.1 9.0

5.9 4.9 5.4

2.5 2.5 2.2 2.6 1.4 1.4 1.7 0.7 0.5 0.8 1.2

2014 2015 2016 2017 2018 2019 1Q 2020

Angel/Seed Early Stage VC Later Stage VC

Top 5 VC funding deals in fintech: Europe January 01, 2020 – March 31, 2020

Deal Post Money Valuation Sr.no Region Name Verticals Key Investors Size ($M) ($B)

1 UK Revolut Payments+ 500 Bond Capital, GP Bullhound, Ribbit Capital, TCV 5.5

2 Sweden Klarna Payments+ 200 Commonwealth Bank of Australia 5.4

Accomplice VC, Anthemis, BNP Paribas, Goldman Sachs, GV, 3 UK CurrencyCloud Payments+ 122 International Finance Corporation, Notion, Sapphire Ventures, - SBI Holdings, Siam Commercial Bank, Visa

4 UK Starling Bank Payments+ 117 JTC, Merian Chrysalis Investment -

Alven Capital Partners, DST Global, Ingo Uytdehaage, Taavet 5 France Qonto Payments+ 116 - Hinrikus, Tencent, Valar Ventures

Data Source: Pitch Book, unless specified otherwise Note: Please refer to the Methodology section at the end of the report to understand the fintech universe and its constituents as defined from the perspective of this report. Deals in Business Solutions on steady, upward trend; deal activity shrinks in Insurance, Lending

Europe VC funding in fintech: Lending, Insurance, Business Solutions January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified Business Solutions Insurance Lending

0.6 0.6 1.4 0.5 1.0 0.4 0.4 0.9 0.3 0.0 0.5 0.5 0.2 0.2 0.0 0.1 0.1 0.1 0.1 0.3 0.1 2014 2015 2016 2017 2018 2019 1Q 2014 2015 2016 2017 2018 2019 1Q 2014 2015 2016 2017 2018 2019 1Q 2020 2020 2020

75 50 49 45 66 65 36 62 39 39 35 29 47 44 21 20 16 11 12 6 8

2014 2015 2016 2017 2018 2019 1Q 2014 2015 2016 2017 2018 2019 1Q 2014 2015 2016 2017 2018 2019 1Q 2020 2020 2020

Capital Invested ($B) Capital Invested 1Q 2020 ($B) Deal Count Deal Count 1Q 2020

Europe VC funding in fintech: Financial Markets, Payments January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified Financial Markets Payments

2.4 0.5 0.4 0.4 1.2 1.4 0.2 0.9 0.2 0.2 0.8 0.6 0.1 0.4 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020

60 66 69 75 72 55 63 67 50 51 38 38

25 10

2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020

Capital Invested ($B) Capital Invested 1Q 2020 ($B) Deal Count Deal Count 1Q 2020

Data Source: Pitch Book, unless specified otherwise Note: Please refer to the Methodology section at the end of the report to understand the fintech universe and its constituents as defined from the perspective of this report. In 1Q-2020, VC funding in fintech companies in Asia clocked $1.0B across

Fintech 51 deals VC funding in Asia continues to slump

VC funding in fintech companies in Asia January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified

238 212 215 After the worst year in five years in 2019, 201 Asian fintech funding in 2020 is expected to face a further blow in the first quarter as China and other Asian countries battle the

147 COVID-19 outbreak. 14.0 Chinese fintech startups were already 114 suffering due to the US-China trade war and lasting effects of the stringed P2P lending regulatory framework; the 10.5 51 coronavirus outbreak has further 6.8 7.2 weakened the funding activity in the 6.1 5.2 country. 1.4 1.0 2014 2015 2016 2017 2018 2019 1Q 2020

Capital Invested ($B) Capital Invested 1Q 2020 ($B) Deal Count Deal Count 1Q 2020 Ant Financial ($B)

Asia VC funding (no. of deals) in fintech companies: By funding stage January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified Angel/Seed Early Stage VC Later Stage VC

0.3 14 3.7 4.0 0.2 0.2 0.2 2.4 2.1 0.1 0.1 1.7 6.7 0.6 0.1 1.0 0.3 4.8 0.3 3.1 3.3 3.0 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020

87 121 54 74 100 99 44 63 89 89 38 39 58 32 46 55 26 13 18 23 10

2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020

Capital Invested ($B) Capital Invested 1Q 2020 ($B) Deal Count Deal Count 1Q 2020 Ant Financial ($B)

Data Source: Pitch Book, unless specified otherwise Note: Please refer to the Methodology section at the end of the report to understand the fintech universe and its constituents as defined from the perspective of this report. Angel/seed median deal sizes continue to grow steadily; but the others remain below 2018 highs

Asia VC funding median deal size: By funding stage January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified 37.7

30.8

26.5 25.0

20.8

15.0

10.0 10.0 8.5 7.3 7.0 5.0 5.6 2.1 1.0 1.5 3.7 0.7 1.0 1.0

2014 2015 2016 2017 2018 2019 1Q 2020

Angel/Seed Early Stage VC Later Stage VC

Top 5 VC funding deals in fintech in Asia January 01, 2020 – March 31, 2020

Deal Post Money S.no Region Name Verticals Key Investors Size ($M) Valuation ($B)

Business 1 China Yunzhangfang 85 Vitruvian Partners - Solutions

Amplo, Coatue Management, Insight Partners, Ribbit Capital, Steadview 2 India BharatPe Payments+ 75 0.4 Capital Management

3 India PaySense Lending 65 PayU -

4 India Vivriti Capital Lending 50 LGT Lightstone Aspada -

Altos Ventures, Broadhaven Capital Partners, Goodwater Capital, Greenspring 5 Japan Kyash Payments+ 44 Associates, Greyhound Capital, Jafco, Partech Partners, Rahul Mehta, Tekton - Ventures

Asia VC funding in fintech: Diverse verticals January 01, 2014 – March 31, 2020 Currency in $, unless otherwise specified Business Solutions Payments Lending

2.6 14 2.3 3.4 1.7 0.3 2.1 1.8 0.6 1.2 1.3 0.2 0.1 5.1 0.8 0.2 0.1 0.9 1.0 1.1 2.0 2.5 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020

52 78 23 23 24 22 40 41 66 69 60 33 15 24 25 35 39 8 7 13 9

2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020 2014 2015 2016 2017 2018 2019 1Q 2020

Capital Invested ($B) Capital Invested 1Q 2020 ($B) Deal Count Deal Count 1Q 2020 Ant Financial ($B)

The underlying deal data used in the report was sourced from Pitchbook. Only transactions with a ‘Completed’ status were considered. Fintech Data Selection Criteria All transactions classified under the fintech vertical by Pitchbook were selected. We also considered transactions based on search results that included keys words such as fintech, financial technology, finance technology, financial service technology, etc. We also specifically reviewed details such as business description, original classification, deal value, and nature of deal for all transactions with a deal value surpassing or equal to $1 billion using publicly available articles and/or the company website. The data was used to make a reasonable judgment about their inclusion or exclusion within the broader fintech universe as well as the verticals/segments therein.

Categorization of Deal Type For the purposes this report, we focus on fintech deals primarily of three types as per Pitchbook classification: venture capital (VC), private equity (PE), and mergers and acquisitions (M&As). All others deal types classifications including, but not limited, to secondary transaction, accelerator/incubator, debt-financed, joint venture (JV), publicly listed, and others were not included in this report. Venture Capital For the purpose of this report, we observed the Deal Type and Deal Universe reported by Pitchbook for each deal. Based on Aranca’s analysis, the deals tagged as early-stage VC, late-stage VC, angel (individual), restart-angel, seed round and corporate were classified as VC deals.

Venture Capital Stages Angel/seed deals include deals tagged by Pitchbook as angel (individual) and seed round. Early-stage deals include those tagged by Pitchbook as early stage, which mostly include Series A and Series B companies. VC corporate deals with size less than $5 million that did not contain any specific tag for early or late stage (about 1% of total VC deals) within Pitchbook data were categorized as early stage. Late-stage deals include deals tagged by Pitchbook as late stage, which typically represent Series C (and above) transactions. Furthermore, in the absence of specific classification, VC corporate deals of size greater than or equal to $5 million (about 1% of total VC deals) were categorized as late stage. In the report, accelerator/incubator is not a part of the VC universe. Methodology (continued)

Categorization of Industry Segments All fintech deals have been classified under nine segments, namely, payments, lending, insurance, financial markets (wealth management and capital markets), personal finance, business solutions, RegTech, real estate/mortgage, and blockchain/crypto. The companies were classified based on the business description provided by Pitchbook or the company website. 1. Payments+: Companies that provide payment and money transfer solutions, wallets, point-of-sale (PoS) systems, credit cards, etc. 2. Lending: Companies that provide loans or a marketplace for lending, working capital or any type of business financing, peer-to-peer (P2P) lending, crowdfunding, etc. 3. Insurance: Companies that provide insurance or technology/marketplace for all types of insurance products, insurance-enabling solutions, etc. 4. Financial markets (wealth management and capital markets): Companies that provide advisory and portfolio management services, investment management firms, financial data and analytics, trading or brokerage firms, etc. 5. Personal finance: Companies that provide expense trackers, budget management apps, financial literacy apps, etc. 6. Business solutions: Companies that provide business-process-enabling systems or technology such as payroll systems, accounting, and companies that do not fall into any of the previously mentioned categories 7. RegTech: Companies that provide solutions for regulatory compliance, risk management, assistance in audit, etc. 8. Real estate/mortgage (PropTech): Companies that provide rent payment solutions, real estate advisory, mortgage-related tech, etc. 9. Blockchain/Crypto: Companies that offer cryptocurrency/blockchain-related services or technology Glossary

Fintech Financial Technology

1Q-2020 First Quarter of 2020

VC Venture Capital

PE Private Equity

M&A Merger and Acquisitions

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Bharat Ramnani, CA Ashish Rane Practice Lead, Valuations and Financial Advisory Associate Director, Valuations and Financial Advisory Email: [email protected] Email: [email protected] Ph: +91 22 3937 9999 Ext. 259 Ph: +91 22 3937 9999 Ext. 390 LinkedIn Profile LinkedIn Profile

Bharat has over 15 years of experience in business valuation Ashish has over 9 years of experience in Corporate Finance, and corporate finance. Currently, he leads Aranca’s Valuation Transaction Advisory and Business Valuation and has and Financial Advisory Practice. He has managed business managed financial advisory engagements for over 300 valuation assignments for over 400 VC-backed companies for Venture Capital firms focused on investments within the a range of tax and financial reporting purposes. He manages Technology domain. the firm’s relationships with private equity clients globally and Ashish holds an MBA from New York’s Stern School of helps them in M&A valuation and evaluation of investment Business and a Baccalaureate degree in Business and opportunities. Management Information Systems from Pennsylvania State Bharat holds Accredited Senior Appraiser (ASA) designation University. conferred by the American Society of Appraisers and is a Disclaimer qualified Chartered Accountant (CPA Equivalent in India). This document is for informational use only and may be outdated and/or no longer applicable. Nothing in this For any queries or assistance please reach out to Ashish Rane at [email protected] publication is intended to constitute legal, tax, or investment advice. There is no guarantee that any claims made will come to pass. The information contained herein has been For additional details, please visit: obtained from sources believed to be reliable, but Aranca does not warrant the accuracy of the information. Consult a https://www.aranca.com/ financial, tax or legal professional for specific information https://www.linkedin.com/company/aranca related to your own situation.