2022 was a challenging year for fintech investment globally — with the Americas in particular seeing a $40 billion drop in investment compared to 2021’s high. The decline in deal value doesn’t tell the full story, however. Deal volume was incredibly robust this year: the second highest total next to 2021. Seed deals saw record investment, which bodes well for the long-term fintech pipeline. At a sector level, regtech investment soared to a new high, while geographically, the Asia-Pacific region also hit a new peak — if by a much narrower margin.
The diversity of jurisdictions attracting significant fintech deals was also very strong. In H2’22 alone, 24 different countries attracted $100 million+ fintech deals (VC, PE, M&A) — ranging from traditional hubs like the US, UK, Singapore and Hong Kong (SAR) to less mature fintech hubs like South Korea, Luxemburg, Italy, Malaysia and the UAE. This diversity reflects the myriad value propositions offered by fintech around the world, from enabling innovation at financial institutions to supporting small business growth and improving financial inclusion and access to financial products.
Key insights from EMEA region
Fintech investment in the EMEA region significantly dropped year-over-year, from $79 billion across 2,379 deals in 2021 to $44.9 billion across 1,977 deals 2022. H1’22 was much stronger than H2’22, accounting for $32.8 billion in investment, including six $1 billion+ deals, including the $3.9 billion buyout of Italy-based SIA, the $2.1 billion acquisition of Sweden-based Tink and the $1.8 billion acquisition of UK-based Interactive investor.
Regtech investment growing quickly in Europe
Investor interest in the regtech space grew significantly over the course of 2022. This growth is expected to continue despite global macroeconomic challenges given the constantly shifting regulatory environment, the increasing complexity of regulatory compliance and the growing number of companies looking for regtech solutions that can enable them to improve the effectiveness and cost-efficiency of their compliance activities. With more fintech companies in the region also moving up the value chain and into regulated activities, there will likely be increasing demand for regtech solutions aimed at helping them adhere to regulatory requirements.
Insurtech continues to attract solid investment in Europe
The insurtech space attracted solid investment in Europe during H2’22, including a $400 million raise by Germany-based Wefox and an $80 million raise by Israel-based Vesttoo. The insurance industry has been lagging the banking industry in terms of digital transformation in the EMEA region over the past few years, but it is now starting to catch up. Over the last year, a number of incumbent insurers have been making investments in insurtechs to help them embrace digital transformation, or to help them enable platforms and ecosystem offerings.
Crypto and blockchain deal sizes plummet in H2’22 though infrastructure players maintain investor interest
In H1’22, Europe saw a number of big deals in the crypto and blockchain space, including large VC raises by UK-based Blockchain.com ($490 million) and neobank and investment apps that had added crypto to their product offering like Germany-based Trade Republic ($1.1 billion) and Denmark-based Lunar ($314 million). Following the Terra (Luna) crash, however, investment in the space dropped sharply. Those that were still able to collect large funding tickets had their focus on web3 and digital asset infrastructure layers and included UAE-based Fenix Games ($150 million), Switzerland-based QPQ ($100 million), UK-based Aztec ($100 million), Cyprus-based ZoidPay ($75 million) and Belgium-based KeyRock ($72.8 million). The fallout of the bankruptcy of FTX triggered further demand for crypto regulation, including review of the need of additional refinements to the upcoming European Markets in Crypto Assets Regulation (MiCA), which could prompt further investment selectiveness.
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Mads Raahede
CEO & Senior Partner
KPMG in Denmark
