When it comes to funding, the world of fintech had a rather challenging start to the year.
According to CB Insights’ Q1 2024 State of Venture Report, fintech funding took a 16% hit compared to the previous quarter. The report also revealed that global fintech startups only managed to raise $7.3 billion during this three-month period – the lowest amount since early 2017.
Interestingly, CB Insights included Flexport’s $260 million convertible note in their count of fintech deals because of the company’s offering of trade finance and cargo insurance. Some may argue that Flexport is not a true fintech company since many companies nowadays offer some form of finance, payments, or insurance. Excluding this round, the total funding for this quarter was just over $7 billion.
On a more positive note, there was a 15% increase in equity deal-making last quarter, showing that investors are still interested in fintech solutions, particularly those centered around payments technology. However, the average deal size was smaller, with larger deals in the first quarter focused on developing broad AI solutions.
During this three-month period, a total of 904 investments were made into fintech startups. The largest raise of the quarter went to Monzo with $430 million in financing, followed by Bilt Rewards with a $200 million Series C. The United States dominated in terms of capital raised, with startups there receiving a collective $3.3 billion across 393 deals in the quarter. Europe followed closely behind, with startups in this region raising $2.2 billion across 203 deals in the same period. The smaller number of deals in Europe points to larger round sizes overall compared to the U.S.
In comparison, the first quarter of 2023 saw a whopping $16 billion in funding for 1,271 fintech startups. This year’s total is down 54.3% from the same period last year. In the first quarter of 2022, $32.9 billion was raised by 2,026 fintech startups. The numbers paint a stark contrast, with both funding amounts and deal counts down from the fourth quarter of 2023, where 786 fintech startups raised $8.7 billion.
Only six new fintech unicorns were created in the first three months of this year, a significantly smaller number compared to previous years.
Overall, while venture funding saw an 11% increase quarter-over-quarter, the number of deals dropped for an eighth straight quarter, decreasing by 7% to a total of 6,238.
