Singaporean fintech startups record a 355% surge in funding in Q1 2021

Fintech startups in Singapore have collectively raised S$656 million (US$492.8 million) in equity funding in the first quarter of 2021, a 355% increase from the previous year, according to a report by Boston Consulting Group.

Photo credit: David Russo.

The surge in investments was largely driven by Grab Financial Group’s series A round of over S$417 million (US$313.2 million) in January, which it intended to use to build its digital financial services.

Other large rounds include Indonesian agent-based fintech startup Payfazz’s US$30 million investment in Xfers, a Singapore-based payment processing gateway, and fintech firm Endowus’ S$23 million (US$17.3 million) series A round.

Companies operating in the retail banking, capital market, and technology sectors have gained the strongest funding traction in 2021 so far, with funding in retail banking climbing to S$484 million (US$363.6 million) in Q1 2021 from S$58 million (US$43.6 million) in the same period a year earlier.

“We were likely going to get to this point in fintech adoption eventually, but necessity has forced change almost overnight in some areas,” said Amra Naidoo, co-founder and general partner of Accelerating Asia, an early-stage VC fund headquartered in Singapore. “For example, in terms of how people purchase goods, lockdowns have forced the adoption of cashless payment options.”

The largest rounds in 2020 include a S$396 million (US$297.4 million) round in AMTD Digital, a unit of investment banking firm AMTD Group; an undisclosed series C round in digital cross-border money transfer platform NIUM; and a S$41.7 million (US$31.3 million) series C round in peer-to-peer lending platform Funding Societies.

The increased funding in Singaporean fintech startups also points to the rising financial inclusion in Southeast Asia, with more players entering the banking system to cater to the large underbanked and unbanked population.

“International players view Singapore as a strategic gateway to the region due to the availability of capital, favorable business environment, strong technology and banking talent pool, and a robust licensing application and vetting process, which provides successful applicants with a credibility brand premium,” said Pauline Wray from BCG FinTech Control Tower.

The most significant fintech deals in 2020 include AMTD Digital’s acquisitions of PolicyPal, FomoPay, and CapBridge; Grab’s acquisition of Bento, a B2B robo-advisor and digital wealth technology provider; and Singlife’s acquisition of about 75% of Aviva Singapore.

Currency converted from US dollar to Singapore dollar: US$1 = S$1.33.