In the coming weeks, the venture capital sector will gather and publish its Q4 2020 statistics, concluding a year characterized by periods of stagnation, recovery, and rapid growth within the private capital landscape.

We can gain an early understanding of a significant portion of the VC ecosystem through a preliminary report on global fintech investment from CB Insights. This data encompasses worldwide investments in fintech businesses from October 1st through December 12th.

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Considering that the final weeks of the year typically experience reduced activity, the available data should accurately reflect the trends within this important segment of the venture capital market. (You can find our analysis of the third-quarter fintech VC market here.)

Initially, I hadn’t intended to analyze this data immediately; I was preparing for broader releases and seeking to establish a baseline understanding before the complete figures became available. However, the compiled results reinforced several key trends observed throughout 2020, effectively summarizing the venture capital market’s performance for the year. It proved too compelling to leave unexplored.

What transpired with fintech venture capital investment during Q4 and throughout 2020? While certain startup phases and geographic areas experienced success, a previously thriving domestic startup sector appears unlikely to achieve similar global results this year. Let's examine the data in detail.

Please note: While this report doesn't include data from the final weeks of the year, we anticipate that the overall figures will closely align with the final, comprehensive results published by various venture data tracking organizations.

North America and Europe Thrive, While Asia Declines

Based on figures that incorporate forecasts for the remainder of 2020, it’s apparent that investment in fintech ventures through venture capital isn’t spread evenly across the globe. Individuals following the industry in the United States or the United Kingdom may be surprised to find that CB Insights anticipates a decrease in both the number and total value of global fintech venture capital deals in 2020. This might seem counterintuitive, considering the numerous transactions involving neobanks and trading platforms that have occurred.

However, this is the case, as the substantial downturn in investment within Asia has offset the gains observed in North America and Europe. The following chart provides a preview of these trends:

The data from 2018 reflects the significant $14 billion investment round received by Ant Financial. Therefore, it’s helpful to consider a reduction of $14 billion from Asia’s overall total for that year. Even accounting for this adjustment, a consistent decrease in Asian fintech venture capital activity can be observed since 2018.

Including Ant Financial’s investment, 2018 represents a particularly strong year for fintech venture capital. Excluding it, 2019 demonstrates notable performance. In either scenario, 2020 is projected to show a reduction in overall fintech venture capital investment compared to previous and more recent years.

It’s important to note that not all stages of investment experienced difficulties; in fact, one specific area saw exceptionally positive results.

Megarounds hold center stage

Fintech companies experienced a strong 2020, with venture funding rounds reaching nine figures occurring at a record rate of at least 97 globally. This represents an increase from the 92 such rounds recorded in 2019, and surpasses the previous high of 66 in 2018.

Those who believe fintech venture capital is not currently experiencing an exceptional year are likely located in the United States. This is because the U.S. witnessed at least 54 venture funding rounds of $100 million or more within the fintech sector in 2020, establishing a new record for any single country.

Conversely, China recorded seven such rounds, matching its total from 2019 but falling significantly below its 2018 peak of 17. Notably, China also observed nine fintech rounds exceeding $100 million in both 2015, 2016, and 2017 – a higher frequency than in more recent years. This data illustrates a discernible trend of decreased venture capital activity within China’s fintech landscape.

A Notable Decline in Seed Funding Worldwide

According to the data source, “Seed and angel [fintech] investments are anticipated to represent 37% of all deal activity in 2020, a decrease from 42% in 2019.”

Considering reports from the United States suggest robust seed investing during the latter portion of 2020, this finding might appear unexpected. We will analyze country-specific data as it becomes available, but it currently suggests that the broader trend in global venture capital—favoring later-stage and larger investment rounds—continued within the fintech industry throughout the previous year.

Analysis of the overall fintech venture capital landscape reveals a dynamic sector attracting global investor interest. However, this interest isn’t uniformly distributed, creating an evolving scenario worth observing. China experienced a shift from hosting the largest venture round ever recorded to becoming only a portion of the third-largest market for fintech deals. Conversely, North America has established itself as the leading global region. Furthermore, Europe has consistently increased its annual fintech venture capital totals since 2016, potentially demonstrating that initial investments in the sector within the region have yielded positive results for early investors.

This concludes our current update, but please check back as we will be examining extensive Q4 data shortly before the earnings season begins. This timeframe should also coincide with a resurgence in initial public offerings, promising a very active January.