In terms of financing, the fintech sector has not had a very good start to the year.
Fintech funding declined 16% quarter-over-quarter during the three-month period, according to CB Insights’ Q1 2024 State of the Business Report. But even more troubling than this double-digit decline is the fact that the $7.3 billion raised globally by fintech startups during the three-month period marked the lowest level that the sector has experienced since early 2017, according to the report.
Notably, CB Insights deemed Flexport’s $260 million convertible note a fintech deal because the company “offers trade financing and cargo insurance.” Some might argue that Flexport is not a true fintech company, as many companies offer some sort of financing, payment, or insurance as part of their offering. Removing this round from this tally, the funding stood at just over $7 billion.
On the positive side, there was a 15% increase in equity deals closed last quarter, which “This means that investors continue to be interested in fintech solutions, particularly payment technologies,” according to a CB Insights spokesperson. However, the average transaction size was smaller. Unsurprisingly, larger contracts in the first quarter went to companies working on broader AI solutions.
During the three-month period, 904 investments were made in fintech startups. Monzo $430 million This funding represented the largest increase of the quarter. And Bilt rewards $200 million Series C ranked third. U.S.-based companies were the largest recipients of capital, collectively raising $3.3 billion in 393 deals during the quarter. Europe wasn’t far behind, with startups raising $2.2 billion in 203 deals during the same period. The significantly reduced number of transactions in Europe indicates overall higher transaction volumes in this region than in the United States.
In contrast, in the first quarter of 2023, $16 billion in funding went to 1,271 fintech startups. This year’s total funding is therefore down 54.3% compared to the same period last year. More importantly, $32.9 billion was invested in 2,026 fintech startups in Q1 2022. Dollars raised and number of deals are also down from Q4 2023, when 786 fintech startups raised 8, 7 billion dollars.
Only six new fintech unicorns were created in the first three months of the year.
Overall, venture capital funding climbed 11% quarter-over-quarter to $58.4 billion, while deals fell for an eighth straight quarter, down 7%. at 6,238.
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