Fintechs under pressure: global venture capital investment at its lowest level in seven years - cautiously optimistic outlook for 2025
Results of the "KPMG Pulse of Fintech" for the second half of 2024:
Results of the "KPMG Pulse of Fintech" for the second half of 2024:
- Global investment in fintechs fell to USD 95.6 billion in 2024 (2023: USD 119.7 billion)
- Weak economic situation and geopolitical crises inhibit investors
- German fintech market weak in European comparison, level of investment comparable to 2018
- Falling interest rates and improved capital procurement options could provide a boost in 2025
Berlin, 18 February 2025
The fintech market remains under pressure: in 2024, global fintech investments fell to USD 95.6 billion - a level last seen in 2017. Geopolitical conflicts and an uncertain market situation characterised by numerous elections in various countries had a particularly inhibiting effect on the willingness to invest. Although global fintech investments fell overall from USD 51.7 billion in the first half of 2024 to USD 43.9 billion in the second half of 2024, there are signs of a slight recovery for 2025: venture capital investments rose from USD 18.0 billion in the third quarter of 2024 to USD 25.9 billion in the fourth quarter of 2024. This is shown in the latest edition of KPMG's "Pulse of Fintech", for which data from Pitchbook was analysed.
After a very volatile year in 2024, calm and stability are gradually returning to the markets. Falling interest rates are also helping to make venture capitalists more willing to invest again. This gives hope for a positive development in the fintech sector.
Regional differences: Declines in the Americas, EMEA and ASPAC, record high in Canada
In a regional comparison, investments in fintechs decreased in most markets: In the Americas, they fell to a six-year low of USD 63.8 billion in 2024, while the EMEA region (Europe, Middle East and Africa) also performed worse than in the previous year at USD 20.3 billion, with the second half of the year being particularly weak at just USD 7.3 billion. In the Asia-Pacific region (ASPAC), investments even fell to a ten-year low of USD 11.4 billion, with China and India in particular recording declines, while Australia and Japan remained stable. Canada was the only bright spot in 2024, with investments climbing to a record high of USD 9.4 billion.
Germany struggles with low fintech investments
The weak economic situation in Germany is also reflected in fintech investments in 2024: with only USD 815 million, Germany made a significant contribution to the overall weak result in the EMEA region. By comparison, the United Kingdom recorded USD 9.9 billion. In addition to the stronger financing infrastructure, the reasons for the considerable difference between the UK and Germany can also be found in a more business-friendly regulatory environment characterised by tax incentives and support programmes.
Despite the decline, there are also reasons for cautious optimism in Germany in 2025: new regulations such as the law on e-billing or the requirements for real-time transfers will come into force in 2025, which could give the German fintech market a boost. In particular, the market in Germany offers great growth potential for fintechs from the payments sector, for example in cashless payments in real time and improving the digital infrastructure.
Payments and wealthtechs show strong recovery, insurtechs suffer from lack of megadeals
A global comparison of sectors shows an ambivalent picture: While investments in start-ups from the payments sector almost doubled to USD 31 billion in 2024 compared to the previous year (USD 17.2 billion), capital investments in fintechs from the insurance sector ("insurtechs") fell to just under USD 3.1 billion in 2024. This is mainly due to the lack of large transactions (2023: USD 8.1 billion). Fintechs with wealth technology solutions ("wealthtech"), on the other hand, showed the most positive development: Global investment in this sector doubled from a more than ten-year low of 190 million dollars in 2023 to 400 million dollars in 2024.
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