Global FinTech funding falls to $52.4bn, yet there is respite, KPMG study shows
By Puja Sharma
-Global FinTech funding falls to US$52.4bn, but it’s not all bad news
-Americas sees FinTech funding climb from $28.9 billion in H2’22 to $36.1 billion in H1’23
-With $8.2 billion of funding, supply chain and logistics focused FinTech funding surpasses previous annual record.
-H1’23’s $1.7 billion in green FinTech funding already ahead of 2022 total
The first six months of 2023 were difficult for the FinTech market globally, with both total funding and the number of deals dropping, from $63.2 billion across 2,885 deals in H2’22 to $52.4 billion in across 2,153 deals in H1’23. The cloud of uncertainty permeating the market continued to wear on investors, driven by factors including global macroeconomic concerns (high inflation and rising interest rates), geopolitical tensions (the ongoing conflict between Russia and the Ukraine), and tech sector challenges (depressed valuations and a continued lack of exits). The collapse of several US banks early in 2023 likely also kept many investors in wait and see mode during H1’23.
But not all the news was negative in H1’23. According to the H1’23 edition of KPMG’s Pulse of FinTech, a number of sectors attracted robust funding during the first half of 2023. Supply chain and logistics-focused FinTechs attracted $8.2 billion in funding in H1’23—well above the space’s 2019 annual record of $5.5 billion. Green FinTech also had robust interest, with US$1.7 billion of funding during H1’23— already slightly ahead of its 2022 results ($1.5 billion).
At a regional level, the Americas saw FinTech funding grow—from $28.9 billion to US$36.1 billion between H2’22 and H1’23—despite a decline in deals volume—from 1,323 to 1,011 deals—over the same timeframe. In the EMEA region, FinTech funding dropped by more than 50%, falling from $27.3 billion across 963 deals in H2’22 to $11.2 billion across 702 deals in H1’23. FinTech funding also dropped in the ASPAC region—from $6.8 billion across 583 deals in H2’22 to $5.1 billion across 432 deals in H1’23.
Judd Caplain, global head of financial KPMG International said, “It wasn’t a surprise to see FinTech funding decline in the first six months of 2023, given the enormous headwinds pressuring the market at the moment.
But the long-term business case for many subsectors within fintech remains very strong—particularly for sectors like payments, insurtech, and wealthtech. Once market conditions begin to even out, funding will likely rebound–if not to the record level experienced in 2021.
Payments remains top FinTech subsector with US$16 billion in funding in H1’23
Payments continued to attract a large share of FinTech funding globally during H1’23, accounting for US$16.2 billion in funding, including the three largest deals of the quarter—the US$8 billion buyout of Coupa by Thomas Bravo, the US$6.9 billion VC raise by Stripe, and the US$4 billion acquisition of EVO payments by Global Payments.
Key Highlights:
- Global funding in FinTech dropped from $63.2 billion across 2,885 deals in H2’22 to $52.4 billion across 2,153 deals in H1’23.
- The Americas attracted $36.1 billion in FinTech funding across 1,011 deals in H1’23—of which the US accounted for $34.9 billion across 809 deals. The EMEA region attracted $11.1 billion across 702 deals, while the ASPAC region attracted $5.1 billion across 432 deals.
- Global VC funding declined from $28.3 billion in H2’22 to $27.3 billion in H1’23. The Americas attracted $16 billion in funding during H1’23—of which the US accounted for $15.1 billion, while EMEA attracted $6.6 billion in VC funding, and the ASPAC region saw $4.6 billion.
- Global M&A activity was quite soft in H1’23, with only $24 billion in deal value, including $19.3 billion in the Americas ($19.2 billion in the US), $4.3 billion in the EMEA region, and $460 million in the ASPAC region.
- Global PE funding was also very soft with $1.1 billion in funding in H1’23, including $768 million in the Americas ($627 million in the US), $279.5 million in the EMEA region, and $60.5 million in the ASPAC region.
- Corporate-participating funding accounted for $16.7 billion in funding during H1’23, including $10.8 billion in the Americas ($10.4 billion in the US), $3.1 billion in the ASPAC region, and $2.7 billion in the EMEA region.
- Payments accounted for $16.2 billion of funding in H1’23, while artificial intelligence and machine learning focused FinTech attracted $8.8 billion, supply chain and logistics focused FinTech attracted $8.2 billion, and insurtech attracted $4.7 billion.
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November 06, 2024