Funding levels to Institutional Investments & Trading Companies fell sharply this year after a record 2016

The record investments total from last year was mainly a result of a $1.2bn deal which made up 48% of funding to the sub-sector in 2016

Total investments in Institutional Investments & Trading companies increased at a CAGR of 111.9% between 2014 and 2016. However, this increase was mainly due to a $1.2bn deal to trading platform Lufax in Q1 2016. Discounting this large deal investments in the subsector actually declined by 41.0% YoY in 2016. Investments to the subsector look set to fall further this year as the first three quarters of the year saw $232.8m worth of funding in deals under $100m, only 54.6% of the investment to this segment last year. The number of deals closed to the sub-sector fell by 22% last year and only 68.8% of the total deals closed in 2016 have been closed in the first three quarters of this year, putting deal activity on track for another decline.

Investments valued under $100m increased threefold last quarter compared to Q2 2017

  • Investment valued under $100m hit a 5 quarter high in Q3 2016 with $161m committed to Institutional Investments & Trading companies, an increase of 17.4% YoY.
  • Over the last five quarters the number of deals has varied falling from a high of 26 in Q3 2016 to 12 in Q3 2017.
  • The last 5 quarters saw two deals valued over $100m. The investment platform Addepar closed a $140m Series D deal on the 8th of June, followed less than a week later by a $145.5m Series C funding round to Hong Kong based Futu Securities. This saw the second quarter of the year receive the most funding to the sector since Q1 2016 when Lufax announced its massive round.

The share of deals to US-based Institutional Investments & Trading companies has progressively declined since 2014 as more transactions are closed in emerging markets

  • The share of investments to companies based in the United States fell by 9% between 2014 and 2016 and look set to fall again by the end of this year.
  • Canada and the United Kingdom have both seen the share of deals to Institutional Investments & Trading companies gradually increase between 2014-2016. Notably Canada has received 9% of deals closed in the first three quarters of this year, up from only 1% of deals in 2014. Most recently CoPower, a clean energy investment platform based in Montreal which offers earnings of up to 5% annually, received $2m of venture funding in July.
  • Other countries including but not limited to; Australia, Sweden, Singapore and Israel receive a combined total of around 25%of deals each year.

The Top 10 Investors Participated in a 15.9% of all deals to the subsector between 2014 and Q3 2017

  • Over 300 institutional and angel investors have participated in deals to Institutional Investments and Trading Platforms since 2014. 15.9% of deals to companies in this subsector included participation from the top ten investors, with the most active investor; Startupbootcamp participating in 3.3% of investments.
  • Nine of the top ten investors are based in the United States with the only remaining investor Startupbootcamp based in the UK.
  • Startupbootcamp’s investments include seed rounds to Risk Management Platform Adapt Ready and Trading Platform CFX Markets.

The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2017 FinTech Global

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