Article Synopsis :
Investment in global wealth tech companies is up 30% on 2017, according to data from FinTech Global.
Wealthtech companies have broken previous records by raising more than $3.4 billion in 2018.
Credit Karma, the financial platform based in San Francisco has become the poster child of the market. In Q1 2018, it raised $500 million of secondary funding from Silver Lake Partners, the largest deal made to date in the sector.
Since then, the company has scaled up to 80 million members and been valued at $3.5 billion.
Though deal activity fell over the 12 months from Q2 2017 – the number of deals halved from 83 to 47 – the investment increased from $508.7 million to $812.9 million.
The largest wealth tech deal was struck by London based challenger bank, Revolut, which raised $250 million – the largest funding round of Q2 2018.
The investment was led by DST Global and increased Revolut’s valuation to $1.7 billion.
The top 10 deals in Q3 2018 raised almost $500 million, more than 80% of all funding for the quarter. This included China based trading and financeal network Snowball ($120 million) and London based on demand current account provider Monese ($60 million).
Small deals of less than $1 million have fallen below 8% for the first three quarters this year. Those above $10 million have increased and made up 63.3% so far.
Large deals exceeding $100 million have almost trebled from 6.3% in 2017 to 17.1% year to date.
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Digital Insurer's CommentsWealthtech deals have increased by almost a third in the first three quarters of 2018 compared with 2017 figures.
In the 12 month period that showed a lull in deal making delivered higher levels of income.
Providers in the US, China and London have made the largest investment deals in 2018 and with the size of deals increasing, as fewer small deals come to market.
While some of the increase may be driven by competition for funding opportunities, it is likely that wealth providers see the benefits of tech just as reinsurers are driving the funding of innovation in the insurance sector.
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