The Irish fintech industry secured $68.6 million in M&A, venture capital and private equity transactions across ten deals in the second half of 2020, according to the latest KPMG Pulse of Fintech for the second half of last year, a bi-annual report tracking global fintech VC, PE & M&A investment trends.
The investment secured in the second half of last year falls below H2 totals in previous years, of $104.8 and $97.9 in 2019 and 2018 respectively. It follows a record start to 2020, where $328.6 million was secured by Irish companies in VC, PE and M&A, dominated by the landmark $162 million acquisition of Irish-founded Prepaid Financial Services by Australia’s EML Payments, which was the largest strategic M&A deal of fintech globally in the first half of 2020.
While investment in the second half of 2020 started slowly, with $4.2 million recorded in the third quarter of 2020, it rebounded in the fourth quarter to $64.4 million, with Dublin-based global payroll solutions provider, Immedis, landing $50 million in early stage venture capital investment from Lead Edge Capital, to support its growth in US and APAC markets. The second largest investment was secured by e-commerce financing and marketing analytics start-up, Wayflyer, which raised $10.2m.
KPMG say Irish fintech companies may have proved particularly attractive in the period in light of Brexit, given the requirement for all UK licensed banks to be licensed in an EU jurisdiction in order to service their EU based clients.
Speaking on investment in Irish fintechs in 2020, Partner and Fintech Lead at KPMG in Ireland, Anna Scally said, "The Irish fintech eco-system is perfectly positioned to provide solutions for institutions which need to adapt quickly and adopt much more streamlined lending processes. This is imperative in order for them to deliver on their digitisation agendas and remain relevant for their clients, particularly SMEs, many of whom are now in trouble as a result of COVID-19."
She added, "A caution for 2021 will be whether smaller fintechs and start-ups will get left behind. Trends indicate that market activity is very focused on big deals with larger Irish players who are already competing successfully on the global stage. Earlier stage companies will struggle to scale without investor backing and this will have a knock-on effect for many years to come."