In terms of funding, the fintech sector has not had a great start to the year.
Fintech Funding down 16% quarter-over-quarter during the three-month period, according to CB Insights’ Q1 2024 State of Business Report. But even more concerning than the double-digit drop was the fact that the $7.3 billion raised globally by fintech startups in the quarter was the lowest the industry has seen since early 2017, according to the report.
Notably, CB Insights rated Flexport’s $260 million convertible note as a fintech deal because the company “offers trade finance and cargo insurance.” Some may argue that Flexport is not a true fintech company because many companies offer some kind of financing, payments or insurance as part of their offering. Subtracting this round from that number, the funding was just over $7 billion.
On the plus side, there was a 15% rise in share trading in the last quarter, which “means investors continue to show interest in fintech solutions — particularly payments technology,” according to a CB Insights spokesperson. However, the average deal size was smaller. As expected, larger deals in the first quarter went to companies working on broader AI solutions.
During the quarter, 904 investments were made in fintech startups. by Monzo 430 million dollars Funding posted the biggest increase of the quarter. And Bilt Rewards $200M Series C; ranked third. Companies based in the United States were the biggest recipients of capital, collectively raising $3.3 billion across 393 deals in the quarter. Europe wasn’t far behind, with startups there raising $2.2 billion across 203 deals over the same period. The drastically lower number of deals in Europe signals larger round sizes overall in that region, compared to the US
In contrast, in the first quarter of 2023, $16 billion in funding went to 1,271 fintech startups. Thus, this year’s total funding is reduced by 54.3% compared to the corresponding period last year. Even more notable, $32.9 billion was allocated to 2,026 fintech startups in the first quarter of 2022. The dollars raised and the number of deals are also down compared to the fourth quarter of 2023, when 786 fintech startups raised $8.7 billion dollars.
Just six new fintech unicorns were minted in the first three months of the year.
Overall, venture financing rose 11% quarter-over-quarter to $58.4 billion, while deals fell for an eighth straight quarter, down 7% to 6,238.
