Asia-Pacific fintechs raise US$3.3b in Q1 2022, but slowdown is coming: report
Kelly Ng
FINTECH companies in the Asia-Pacific raised US$3.33 billion over 186 deals in the first quarter of 2022, surpassing previous deal values and volumes recorded in the March quarter over the past 3 years.
This represents a 44 per cent year-on-year rise in deal value, and 23 per cent year-on-year growth in deal volume, said a report by S&P Global Market Intelligence.
Compared to the previous quarter, however, Q1 funding levels fell 26 per cent in dollar amount raised and 9.7 per cent in number of deals.
The researchers expect a decline in funding activity in the coming months. But mature fintechs remain attractive to venture capitalists and may help offset some decline, they said.
“While year-over-year record-high funding levels in the first quarter paint a rosy picture of the fundraising environment for Asia-Pacific fintechs, a sequential comparison signals otherwise and is perhaps more indicative of what lies ahead,” said Celeste Goh, research analyst at S&P Global Market Intelligence.
The researchers also noted that cheque sizes are declining. In the March quarter, there were 8 transactions with values exceeding US$100 million, with these mega-rounds contributing to 36 per cent of total funds raised. In the previous quarter, there were 11 mega-rounds that accounted for 55 per cent of the dollar amount raised.
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India-based fintechs dominated in Q1 2022, accounting for 42 per cent of total deal value and 24 per cent of volume in the region.
In segment terms, digital lenders that topped other fintech categories accounted for 38 per cent of total deal value, with S$1.28 billion raised across 52 deals. It was the segment hardest-hit by the pandemic.
The 3 most heavily funded lenders including India-based Oxyzo and Credavenue, as well as Singapore-based Funding Societies, focus on lending to small- and medium-sized businesses and largely rely on third-party funding to extend credit.
However, investors’ optimism in digital lenders could be short-lived if recessionary fears and a rising-rate environment dampens loan demand, the researchers said.
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