Overall fintech funding in the U.S. grew to $2 billion across 129 deals in the second quarter, up $500 million from the first quarter, according to KPMG’s latest Pulse of Fintech report.
Venture capital investment drove the quarter’s fintech funding surge, with some $1.5 billion across 104 deals, making it the second-strongest quarter ever for venture capital fintech investment, the report said.
KPMG’s analysis showed that investor interest in the U.S. shifted to a focus on business-to-business and helping to improve cost efficiencies of mid- and back-office functions. Three of the quarter’s top 10 deals were focused on the B2B market rather than customer-facing front-office initiatives.
“Early on, the focus of many fintech startups was geared towards enhancing the customer experience, but now we are also seeing them turn their attention to automating mid- and back-office banking applications,” Brian Hughes, co-leader of KPMG Enterprise Innovative Startups Network and national co-lead partner of KPMG’s venture capital practice in the U.S., said in the statement.
According to KPMG, total global fintech investment more than doubled quarter over quarter to $8.4 billion across 293 deals, up from $3.6 billion in the January-to-March period. Global venture capital funding remained solid with $2.5 billion invested across 227 deals.
The Americas region led second quarter fintech funding, on the strength of the $3.6 billion buyout of Toronto-based payments company DH by U.S.-based Vista Equity Partners. The deal was the largest foreign takeover of a Canadian company since 2014, KPMG noted.
Excluding the DH deal, the U.S. continued to set the pace in the Americas with five of the top 10 fintech deals globally:
- AvidXchange, payments/transactions — $300 million
- Bright Health, insurtech — $160 million
- Pos Porta, institutional/B2B — $158 million
- Fast Match, payments/transactions — $153 million)
- Addepar, wealth/investment management — $140 million
Other Q2 Findings
In the second quarter, overall deal count with corporate participation in fintech-focused venture capital deals increased to nearly 21% from 14% in the first quarter.