Global investment in fintechs collapses
KPMG Pulse of Fintech: Down by more than 50 percent
KPMG Pulse of Fintech: Down by more than 50 percent
Berlin, Juli 31st 2023
Investments in start-ups from the financial services sector have slumped drastically in the first half of this year compared to the previous year. While global venture capital investments from January to June 2022 still amounted to 107.8 billion dollars, this sum fell by more than 50 per cent to only 52.4 billion dollars in the first six months of this year. This is the result of the KPMG Pulse of Fintech, for which data from PitchBook was analysed.
There is uncertainty in the market due to geopolitical tensions and global macroeconomic issues such as high inflation and rising interest rates. Add to this low valuations and a persistent lack of exits in the technology sector. And the collapse of several US banks at the beginning of the year is also likely to have made many investors cautious.
Logistics and "green" fintechs with strong figures
Nevertheless, some bright spots can be identified. For example, supply chain and logistics-focused fintechs attracted $8.2 billion in investment in the first half of the year - even significantly more than the previous full-year record in 2019 ($5.5 billion). Green" fintechs also attracted a lot of interest: they were able to raise 1.7 billion dollars, which is already more than in the whole of 2022 (1.5 billion dollars).
Several billion-dollar deals
The US accounted for the lion's share of fintech investment in the first half of the year at $34.9bn; as did five of the seven first-half fintech deals worth more than $1bn. These include Thomas Bravo's $8bn acquisition of Coupa, Stripe's $6.9bn VC raise and Global Payments' $4bn acquisition of EVO Payments. The EMEA and ASPAC regions each saw a billion-dollar deal in the first six months: UK-based Wood Mackenzie was acquired by Veritas Capital for $3.1 billion, while China's Chongqing Ant Consumer Finance closed a $1.5 billion VC funding round.
Cautious outlook - AI with potential
With no end to geopolitical and macroeconomic uncertainties in sight, investment in fintech companies is likely to remain relatively weak in the second half of the year, KPMG estimates.
However, one area that could see a sharp increase in investor interest is artificial intelligence, especially generative AI. While its application in financial services is still in its infancy, there is enormous potential in areas such as cybersecurity, regtech and wealthtech.
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Deputy Head Corporate Communications
KPMG AG Wirtschaftsprüfungsgesellschaft
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tblees@kpmg.com