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New York topped Silicon Valley in fintech venture financing in Q1 2016

New York received more financial technology (‘fintech’) venture financing than Silicon Valley, for the first time, during the first three months of this year, according to a new report by Accenture and the Partnership Fund for New York City.

According to the report, $690 million flowed to New York and $511 million flowed to Silicon Valley in Q1 2016. Last year, fintech investment in New York tripled to $2.3 billion, accounting for nearly 10 percent of all fintech investment globally.

“We are now in a golden age of fintech,” said Robert Gach, Capital Markets managing director for Accenture Strategy and co-founder of the FinTech Innovation Lab. “Venture capital is driving major innovations. But it is difficult for fintechs – particularly in the U.S. – to grow and scale on their own, so investments are shifting to fintechs that partner with rather than compete against traditional institutions. That is positioning New York at the epicenter of the fintech boom.”

The report, which is based on an analysis of CB Insights data, also showed that fintech investment in North America has shifted away from ventures that compete against financial institutions and toward those that partner and collaborate with them.

In 2010, 60 percent of North American fintech investment dollars went to ventures that compete against traditional institutions, while 40 percent went to those that collaborate with them. In 2015, the ratio was reversed.

That change was far more pronounced in New York: 37 percent of New York investment dollars went to fintech ventures that collaborate with financial institutions in 2010; and that number had increased to 83 percent in 2015.

According to Mr. Gach, “The reality of the U.S. regulatory landscape – combined with the surging demand for digital innovation – makes the fintech investment boom a watershed for banks. With friction easing and cooperation growing between entrepreneurs and institutions, financial services firms need to take the next step to deeper adoption and integration of these innovations.”

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