0 WHAT IS CB INSIGHTS? CB Insights is a tech market intelligence platform that analyzes millions of data points on venture capital, startups, patents, partnerships and news mentions to help you see tomorrow’s opportunities, today. CLICK HERE TO LEARN MORE 1 TRUSTED BY THE WORLD’S LEADING COMPANIES “We use CB Insights to find emerging trends and interesting companies that might signal a shift in technology or require us to reallocate resources.” Beti Cung, Corporate Strategy, Microsoft 2 The CBI Community — Membership Has Benefits events.cbinsights.com INDUSTRY- SCALE SUMMITS PEER- TO- PEER CLIENT- ONLY EVENTS NETWORK DEMO DAY 3 June 11 - 13, 2019 New York, NY events.cbinsights.com/future-of-fintech @ #FutureFintech4 s s Summary of findings 2018 VC-backed fintech deals and funding set an annual record: In 2018, Fintech mega-rounds continued in Q4’18, while IPO activity is likely to VC-backed fintech companies raised $39.57B across 1,707 deals globally. remain lackluster in 2019: 2018 saw a whopping 52 $100M+ financing Deals were up 15% year-over-year while funding surged 120% on the back of deals to VC-backed fintech companies – including 14 in Q4’18 worth $3.8B. 52 mega-rounds ($100M+) worth $24.88B combined. Asia made a run at the US as the top market for fintech with a surge in Fintech is happening on global scale with deals outside of core markets early-stage and mega-round investments: Asia saw the biggest boost in (US, UK, and China) accounting for 39% of deals: Fintech deal hubs are deals, growing 38% YOY and a record level of funding raising starting to emerge globally. The c ount of unique f intech startups raising $22.65B across 516 deals. Political and trade war tensions may have funding topped an annual high of 1,463 companies, and the unique number caused some of the pull back in H2’18, but 2019 could see Asia overtake of investors reached 2,745 boosted by an influx of corporate investors. the US. Early-stage deals, as a percentage, fell to a 5-year low as investors The US remained the top market for deals with 659 investments worth concentrated bets in perceived winners: Global seed and Series A fintech $11.89B funding, both a new annual high: Europe saw a pull back in deals deals grew 5% on an annual basis in 2018, but fell as a percentage of total to 367 deals but funding topped $3.53B, an annual record. deals to 57%. US early-stage deals were flat YOY as investors concentrated their bets in established fintech unicorns. South America reached a turning point in the eyes of investors in 2018, despite political turmoil across the region: South America saw funding top There are 39 VC-backed fintech unicorns worth a combined $147.37B: $540M across 55 deals, both a new annual record. In H2’18, investors Q4'18 saw five new unicorns births (Plaid, Brex, Monzo, DevotedHealth, and started to pull back in the region as social, political, and monetary conflicts Toss) and two in the first month of Q1’19 (N26 and Confluent). The struck the region. Despite strain, Brazil-based NuBank, became South cohort’s total valuation in 2018 was boosted by a record year for mega- America’s first unicorn and closed out 2018 with a $90M investment from rounds to existing unicorns, including Gusto and Robinhood, among others. Tencent. Note: Report focuses on all equity rounds to VC-backed fintech companies. This report does not cover companies funded solely by angels, private equity firms, or any debt, secondary, or line of credit transactions. All data is sourced from CB Insights. 5 Contents 8 2018 Financing Trends 90 Appendix: Annual Deals & Dollars 2018 Top VC-Backed Fintech Deals Regional Trends 2018 Most Active Fintech Investors Fintech Unicorns 21 2019 Trends To Watch How we did in 2018 What to watch for in 2019 Where investors are placing bets in fintech Which markets will see fintech emergence How incumbents will act 6 WHAT THIS REPORT COVERS Payments processing, card developers, Companies selling insurance digitally or providing & subscription billing software tools data analytics and software for (re)insurers Tools to manage bills and track Sales & trading, analysis, and infrastructure personal and/or credit accounts tools for financial institutions PAYMENTS/ INSURANCE BILLING PERSONAL CAPITAL FINANCE MARKETS Audit, risk, and regulatory Investment and wealth management compliance software platforms and analytics tools WEALTH REGTECH MANAGEMENT Companies leveraging blockchain MONEY International money transfer technologies for financial services BLOCKCHAIN/ TRANSFER/ and tracking software CRYPTO REMITTANCES MORTGAGE/ LENDING REAL ESTATE Marketplace lending & alternative Mortgage lending, digitization, underwriting platforms 2019 FINTECH and financing platforms TRENDS REPORT 7 First, a look at what happened in 2018… 1. Global fintech financing hit a new record 2. Early-stage fintech deal activity slowed down 3. 16 new fintech unicorns were birthed 8 FINTECH DEALS AND FUNDING SOAR TO NEW RECORDS Global fintech investment tops $39B in 2018 Annual global fintech deals and financing, 2014 – 2018 ($B) 1,707 1,480 1,254 1,153 885 $8.34 $16.30 $19.29 $18.00 $39.57 2014 2015 2016 2017 2018 9 Ant Financial’s $14B investment accounted for 35% of total funding in 2018 $14,000 $4,500 $3,204 $3,236 $2,905 $2,280 $2,525 $2,694 $1,979 $1,728 $1,393 $20,526 $4,977 $6,351 $5,405 $5,737 $4,570 $4,501 $5,977 $6,039 $7,033 $8,455 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 10 Q4’18 SAW A THREE- QUARTER LOW FOR GLOBAL VC- BACKED FINTECH DEALS VC-backed fintech deals declined in Q4’18 but remain above 2017 levels 441 440 426 385 400 365 366 364 331 337 315 304 292 298 270 260 237 246 210 192 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 11 North America is no longer powering global fintech funding growth Global VC-backed fintech funding by continent, 2014 – 2018, ($M) (*Ant Financial excluded) South America $540 167% YOY $343 Australia $103 396% YOY $3,525 Africa $202 376% YOY $69 $22 Europe $2,843 24% YOY $2,009 Asia $1,377 $8,648 265%* YOY $5,028 $6,203 $1,198 $6,842 $1,114 North America 43% YOY $5,923 $9,125 $6,267 $8,673 $12,415 2014 2015 2016 2017 2018 *Ant Financials' $14B round in Q2’18 was excluded from the chart represented on this slide for illustrative purposes 12 Deals grew in every market except Europe in 2018 Global VC-backed fintech deals by continent, 2014 – 2018 717 55 643 53 629 622 553 516 373 367 27 318 371 24 256 23 25 16 18 17 21 156 234 262 10 13 7 144 6 3 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 North America Asia Europe Africa Australia South America Note: Charts not to scale 13 Early-stage fintech deal share falls for the 5th year Annual deal share by stage to global VC-backed fintech companies, 2014 – 2018 8% 9% 12% 13% Other 8% 7% 6% 16% 7% 6% Late-Stage 17% 19% 18% 18% Mid-Stage 21% Early-Stage 67% 65% 64% 62% 57% 2014 2015 2016 2017 2018 14 GLOBALLY THERE ARE 39 FINTECH UNICORNS VALUED, IN AGGREGATE, AT $147.37 BILLION 15 39 fintech unicorns valued at $147.37B Global VC-backed fintech companies with a private market valuation of $1B+ (1/25/19) NORTH AMERICA EUROPE ASIA UNITED STATES UNITED KINGDOM GERMANY SWEDEN CHINA $38B Valuation $20.3B Valuation $3B $1.6B Valuation $1.7B $1.27B $2.7B (as of Q1’19) $2.0 - $2.5B $8B $5.3B $1.5B $1.8B $4B $1.4B $3.2B $1.2B $1.6B $3B $2.7B $1.1B $1.8B $1.1B $1.2 - $1.6B $1B $1B SOUTH KOREA $1.4B $1B $2B $2.1B (as of Q2’15) $1.2B INDIA $1.24B $1B SOUTH AMERICA BRAZIL $1B $1B $4.49B (as of Q1’17) $1.9B $2.5B (as of Q1’19) $4B Valuation 16$10B 16 fintech unicorn births in 2018 Global VC-backed fintech companies with a private market valuation of $1B+ (1/25/19) NORTH AMERICA EUROPE ASIA UNITED STATES UNITED KINGDOM GERMANY SWEDEN CHINA $38B Valuation $20.3B Valuation $3B $1.6B Valuation $1.7B $1.27B $2.7B (as of Q1’19) $2.0 - $2.5B $8B $5.3B $1.5B $1.8B $4B $1.4B $3.2B $1.2B $1.6B $3B $2.7B $1.1B $1.8B $1.1B $1.2 - $1.6B $1B $1B SOUTH KOREA $1.4B $1B $2B $2.1B (as of Q2’15) $1.2B INDIA $1.24B $1B SOUTH AMERICA BRAZIL $1B $1B $4.49B (as of Q1’17) $1.9B $2.5B (as of Q1’19) $4B Valuation 17$10B GROWTH INVESTING IN FINTECH HIT A PEAK IN 2018 2018: 52 fintech mega-rounds total $24.88B Global number of fintech mega-rounds ($100M+), 2014 – 2018 25 21 18 18 12 11 10 8 7 5 3 1 1 2014 2015 2016 2017 2018 North America Asia Europe South America Australia 18 NUMBER OF FINTECH INVESTORS DOUBLE SINCE 2014 A third of global fintech deals include a CVC Number of investors in a fintech startup reached Corporate and CVC participation in fintech saw a a new high in 2018 new annual high 2014 – 2018 2014 – 2018 2,745 2,327 1,973 1,779 1,349 67% 74% 73% 79% 83% 17% 21% 26% 28% 33% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Corp / CVC Participation Other Investors 19 FINTECH DEALS SHIFT AWAY FROM CHINA AND THE US Traditional hubs no longer power fintech growth Count of fintech startups raising funding hit an Deals are shifting away from core fintech hubs annual record in 2018 2014 – 2018 2014 – 2018 27% 32% 39% 41% 39% 745 990 1,077 1,247 1,463 73% 68% 61% 59% 61% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Deals in China, UK, US Deals Outside Core Markets 20 2019 Fintech Trends #AhaCBI BUT FIRST… HOW DID WE DO ON OUR 2018 FINTECH TRENDS TO WATCH? 2018 TREND TO WATCH KEY DEVELOPMENTS HOW WE DID 1.