- Irish fintechs attracted just over $1 billion in investment in 2022, down almost 37% compared with 2021 which stood at $1.62 billion, according to the just published KPMG Pulse of Fintech H2’22 report.
- The sector secured $742 million in transactions and investments in H2’22 in Ireland, a significant increase from $259 million in H1’21.
- However, activity in H2 was skewed significantly by one large transaction – the purchase of Cork-based Global Shares by J.P Morgan for $676 million.
- The global fintech market attracted $164.1 billion across 6,006 deals in 2022 – a strong showing despite falling by almost a third (31%) from the high of $238.9 billion in 2021.
Irish fintech recorded a value increase in investment in the second half of 2022, with investments and transactions reaching $742 million. This is a significant increase compared with the first six months of last year, where investment and transactions totalled $259 million.
However, the increase is significantly skewed by one major transaction – namely, the purchase of Co. Cork-based payments firm Global Shares for $676 million by JP Morgan Chase, the world’s largest bank by market capitalisation. Global Shares manages employee equity plans for companies in the start-up and tech space.
Another notable transaction during the second half of 2022 was the $60 million raised by Dublin-based tax automation group Fonua in venture capital funding. Fonua was founded three years ago by three Uber alumni.
The impact of cost pressures
When Irish fintech activity is viewed on a quarterly basis, there was a large drop from Q3, which totalled 7 transactions worth $740.99 million, to Q4, which saw investment in Ireland of only $1.47 million across 2 transactions. This came as interest rates and input costs across the Eurozone continued to increase.
Deal numbers also dropped from 21 in the first half of 2022, to only 9 in the second half. Excluding one large transaction, the period saw investment of only $66 million, a significant drop-off from $259 million in H1 2022.
Anna Scally, Head of Technology and Media said “With interest rates rising, valuations will be under pressure for some time. This may inhibit some of the larger potential M&A transactions as investors wait to see if prices reduce further. That said, M&A activity will likely increase for smaller size deals as corporates and larger fintechs take advantage of competitive valuations. We also expect that good businesses with a unique product or service will continue to attract investment from international players.”
Regtech and payments expected to flourish
Ian Nelson, KPMG’s head of financial services said: “All sectors are facing higher costs across Europe. However, notwithstanding these pressures, we expect investment in areas such as regtech and payments to continue to flourish, as businesses including other fintechs, seek solutions to address the changing regulatory environment and consumers increasingly looking beyond traditional banking products and services”.
Fintech drop follows global trend
The total level of Irish fintech activity in 2022 stands at $1.025 billion, a decrease of over a third from the $1.62 billion invested in 2021. This follows the global trend, where fintech investment globally dropped to $164.1 billion across 6,006 deals in 2022, down from a record high of $238.9 billion across 7,321 deals in 2021.
2022 global highlights
- Payments remained the strongest area of fintech investment globally in 2022, with US$53.1 billion in investment compared to US$57.1 billion in 2021; regtech was the only sector to buck the downward trend, with investment in the space rising from US$11.8 billion in 2021 to a record US$18.6 billion in 2022.
- Investment in crypto and blockchain fell from US$30 billion in 2021 to US$23.1 billion in 2022. The decline in the second half of the year was particularly sharp—as scrutiny in the space picked up significantly in the wake of the May Terra (Luna) crash and the November bankruptcy of FTX.
- Global M&A deal value dropped from US$105.1 billion in 2021 to US$73.9 billion in 2022; global VC investment declined from US$122.9 billion to US$80.5 billion year-over-year. PE growth investment dropped less sharply, falling from nearly US$11 billion in 2021 to US$9.7 billion in 2022.
- The Americas attracted US$68.6 billion across 2,786 deals in 2022—of which the US accounted for US$61.6 billion across 2,222 deals, while the Asia-Pacific region attracted US$50.5 billion across 1,227 deals, and EMEA attracted US$44.9 billion across 1,977 deals.
- Corporate-participating VC investment globally fell from US$62.8 billion in 2021 to US$39.6 billion in 2022.
- The median deal size rose for both angel & seed-stage deals (from US$1.8 million in 2021 to US$2.4 million in 2022) and early-stage VC deals (from US$5.75 million to US$6 million)—while falling for later-stage VC deals (from US$15 million to US$13.9 million).
Get in touch
The pace of change is challenging leaders like never before. To find out more about how KPMG perspectives and fresh thinking can help you focus on what’s next for your business or organisation, please get in touch with Anna Scally, Fintech lead. We’d be delighted to hear from you.
Anna Scally
Partner, Head of Technology and Media
KPMG in Ireland
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Sandra Farrell
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KPMG in Ireland