Fintech funding fell in 2022
- Although the US led fintech funding in the fourth quarter of last year at $3.9 billion, or about a third of global funding, which was a 79% drop from the fourth quarter of 2021, when U.S. fintechs pulled in $18.2 billion in venture funding, according to data released Wednesday from the research firm CB Insights.
- The US collected 342 financing deals in Q4 2022, according to CB Insights’ 2022 Q4 State of Venture report, down 21% from 423 for the 2021 quarter.
- Fintech Funding on the global stage fell 46% for the full year last year compared to 2021, to $75.2 billion in 2022, CB Insights said. However, the global fintech The number of deals fell by only 8% compared to 2021, and equates to 5,048 deals for 2022. Although the first quarter of 2022 was promising, the numbers fell as the year progressed. In the last quarter, global funding totaled $10.7 billion across 972 deals – a stark contrast to the $38 billion raised across 1,428 deals in Q4 2021.
US funds during the fourth quarter included $358 million for start-up accounting and finance Tryllian$165 million for assets and trading company Uniswap153 million dollars for the start-up of accounting and finance Clear cover$150 million for the accounting and finance company Avant and $150 million for the start of lease payments Car Rewards.
New York-based Bilt Rewards, which offers users reward points for rent payments, was the only payments company to make the list of top unicorn births in the fourth quarter. That startup, which also operates a co-branded credit card, was valued at $1.5 billion when it raised $150 million in October 2022.
The US attracted the most fintech venture capital, followed by Europe, with $2.8 billion across 248 fintech financing deals, and Asia took third place, with $2.7 billion and 228 deals, CB Insights said. The US also maintained its leadership globally fintech share agreement.
Reflecting the downturn in the fintech and payments venture world, both the average and median fintech deal sizes fell in 2022. The average deal size was $18.7 million last year, compared to $31.4 million in 2021. The median deal size clocked in at $4.3 million dollars, down from $5 million the year before, according to CB Insights.
In addition, early-stage funding rounds accounted for 68% of the share of fintech deals in 2022, CB Insights said, while mid- and late-stage deals became less common. Funding has become particularly difficult for more mature startups to secure, such as those seeking $100 million plus. At that level, investors have become more skeptical of a startup’s plans for profitability and scale.
Among payments players, Stripe, which has dueling headquarters in San Francisco and Dublin, UK-based Checkout.com and UK-based Revolut joined the top 10 unicorns by valuation in the fourth quarter of 2022, with valuations of $95 billion, $40 billion and $33 billion, respectively. However, these valuations were based on their most recent funding rounds – which occurred before the tougher economic climate and companies that Stripe and Checkout.com has cut its internal valuations in recent months.
Fintech, M&A, IPO and SPAC (Special Purpose Acquisition Company) activity declined in 2022 compared to the previous year, CB Insights said. The largest equity investment in fintech in the fourth quarter: JPMorgan Chase’s $869 million stake in Greek payment company Viva Wallet.
There were 742 fintech mergers or acquisitions last year, down 20% from 2021. Fintech M&A was at its lowest level all year in Q4, with 143 mergers and acquisitions.
It was the 23rd fintech IPOs last yeardown 72% from 2021 and 9 SPACs in the arena, which was a decrease of 53% compared to the previous year.