Venture capital investments in German fintechs fall to lowest level in ten years in 2023

• Global investment in fintechs in 2023 has fallen to its lowest level since 2017; investment in the German fintech sector is at its lowest level since 2014
• Fintechs from the real estate and insurance sectors are bucking the trend; majority of investments continue to flow into fintechs from the payment sector
• Investments in German crypto start-ups decreased significantly in the second half of 2023 compared to the first half of the year

Global investment in start-ups in the financial sector fell to its lowest level since 2017 last year. In 2023, a total of 113.7 billion dollars flowed into fintechs as part of 4,547 deals - around 31 per cent less than in 2022 (164.1 billion dollars). This downward trend is particularly evident in the German fintech sector. At 1.11 billion dollars, total investments in this country in 2023 reached their lowest level since 2014 (0.99 billion dollars), with only 113 deals being concluded in total. These are the findings of the latest KPMG Pulse of Fintech, for which data from Pitchbook was analysed.

In times of high interest rates, stubborn inflation and geopolitical crises, none of the regions analysed were able to grow: Start-ups from the Asia-Pacific region experienced the greatest decline. Here, investments slumped from 51.3 billion dollars in 2022 to 10.8 billion dollars in 2023. In Europe, the Middle East and Africa (EMEA), investment fell from USD 49.6 billion to USD 24.5 billion in the same period. The American continent proved to be the most robust, but at USD 78.3 billion in 2023, it also recorded a decline compared to the previous year (USD 95.4 billion). The USA remains the clear leader in terms of the number of top deals: eight of the ten largest deals in 2023 are attributable to American fintechs.

A comparison of sectors reveals some bright spots: fintechs from the real estate sector ("proptechs") attracted investments totalling USD 13.4 billion, significantly more than in 2022 (USD 4.1 billion). Fintechs from the insurance sector ("insurtechs") also attracted interest from investors and raised USD 8.1 billion (2022: USD 5.9 billion). The strongest growth was recorded by "green" fintechs ("greentechs") - at USD 2.1 billion, they received around twice as much investment in 2023 as in the previous year (USD 1.2 billion). Fintechs from the payment sector again received the largest absolute share of all investments, but at 20.7 billion dollars, they also recorded a significant decline compared to 2022 (57.9 billion dollars).

In Germany, start-ups from the crypto sector suffered a significant downturn in the second half of 2023. While USD 131.4 million was invested in these fintechs in the first six months, this figure fell to just USD 10.7 million in the second half of the year.

Clemens Reisbeck

Deputy Head Corporate Communication
KPMG AG Wirtschaftsprüfungsgesellschaft

T +49 89 9282 1722
creisbeck@kpmg.com