Singapore fintech to record worst year as investments plunge 78%

Just over 19.9% of investments in H1 came in deals over $50m.

Singapore’s fintech industry is set to have its worst year since 2017 with total investments in H1 dropping 78% from the same period last year, totaling to just over $350m via 47 completed deals, according to data from Fintech Global.

The pandemic and the economic fallout that ensued triggered the fall, as just over 19.9% of total investment for the first-half year came from deals sized over $50m, a measly figure compared to H1 2019 where deals above $50m made up 92.5% of total investments for the period. Firms have only recorded a single deal over $50m so far, compared to six in 2019.

However, total capital invested grew at a compound annual growth rate (CAGR) of 105.9% from 2016 to 2020.

Moreover, the share of deals under $1m nearly halved, brought about by a lack of deals done due to the pandemic. In Q1, deals completed under $1m accounted for 25% of total funding; that percentage dropped to 5.8% in Q2.

Meanwhile, there is an increase in mid-sized deals, with investments amounting between $10m and $25m rising by 10.9 percentage points (pp) while deals sized between $5m and $10m rose 4.8pp.

“The increase in these ranges signals that investors kept their course with their current investments but refrained from investing in larger companies or taking companies to further funding rounds,” the report said.

In addition, regtech deal shares rose up 6.7pp to hit a record-high of 19.1%, following efforts by the Monetary Authority of Singapore (MAS) to merge money exchange and remittance systems into one legislation.

Payments and remittance firms also saw increased interest from investors, the report noted, on the back of the pandemic’s effect on cash payments, physical banking, and POS systems. The shift to digital banking and contactless payments fuelled demand despite lack of deals and funding.