Singapore’s fintech market demonstrated remarkable resilience and adaptability in the first half of 2024, despite a global decline in fintech investment, according to KPMG’s Pulse of Fintech report for H1 2024.
Deal activity in Singapore surged by 19%, reaching 117 deals across venture capital (VC), private equity (PE), and mergers & acquisitions (M&A), up from the 98 deals recorded in the second half of 2023.
However, the total amount raised by Singapore fintechs fell by 34% to USD 522.89 million, down from USD 790.10 million in H2 2023.
Globally, fintech investment dropped from USD 62.3 billion across 2,287 deals in H2 2023 to USD 51.9 billion across 2,255 deals in H1 2024, reflecting increased investor caution due to high interest rates and economic uncertainties.
Early-Stage Investments Drive Deal Activity
The shift towards smaller, early-stage investments was pronounced in Singapore, with 52 early-stage deals, 32 seed rounds, 25 later-stage investments, and five M&A transactions recorded.
Anton Ruddenklau, Global Head of Fintech and Innovation at KPMG International, noted that the overall global investment total was buoyed by a handful of large deals.
However, early-stage deals thrived due to interest in new technologies like AI applications and evolving business models within the financial services sector.
Cryptocurrency & Blockchain, Payments, and AI Lead Sectors
The cryptocurrency and blockchain segments of Singapore’s fintech market saw significant activity, with US$211.90 million raised across 72 deals in H1 2024, a 22% increase from H2 2023.
The rise in blockchain and digital asset investments occurred amid heightened regulatory scrutiny and Singapore’s efforts to enhance risk management frameworks for digital asset tokenisation.
The payments segment attracted USD 80.20 million across 10 deals, a 78% decline from USD 142.65 million in H2 2023.
The largest payments deal in the Asia-Pacific region involved a USD 50 million venture capital raise by Singapore-based B2B payments platform Nium.
AI funding stabilised following a surge in H2 2023, with investments falling to USD 65.62 million across 10 deals in H1 2024, down from USD 333.13 million in H2 2023.
Increased regulatory scrutiny and economic uncertainties have slowed the deal-making process in this complex and high-investment segment.
Outlook for 2025
Despite recent economic headwinds and smaller deal sizes, there is optimism for 2025.
Expectations of a backlog of fintech deals could rejuvenate the investment landscape, as noted by Karim Haji, Global Head of Financial Services at KPMG International.
Global Trends
On the global stage, only five fintech deals exceeded USD 1 billion in H1 2024, compared to several high-value transactions in previous periods.
Total global fintech investment fell to USD 51.9 billion, with notable declines in the EMEA region, while the Americas and Asia-Pacific showed resilience in deal volume.
“The high cost of capital and geopolitical uncertainty have significantly dampened global investments, and the fintech market is not immune,” said Haji. “Investors are focusing on improving the companies they already own rather than pursuing new acquisitions.”
Overall, while the global fintech sector faces challenges, the Singapore market’s adaptability and resilience offer a positive outlook for future growth.
Business News Asia