When it comes to funding, the fintech sector hasn't had a great start to the year.
According to CB Insights' Q1 2024 Venture Landscape report, fintech funding fell 16% quarter-on-quarter over the three-month period. But even more troubling than the double-digit drop, the report says the $7.3 billion raised by fintech startups globally in the last three months was the lowest level for the sector since early 2017. It was true.
Notably, CB Insights counted Flexport's $260 million convertible note as a fintech deal because the company “provides trade financing and cargo insurance.” Some might argue that Flexport is not a true fintech company, as many companies offer some form of finance, payments, or insurance as part of their services. Excluding this round from this count brings the total amount raised to just over $7 billion.
On the positive side, equity deal closings increased by 15% last quarter. This, according to a CB Insights spokesperson, “signifies that investors continue to show interest in fintech solutions, particularly payments technology.” However, the average deal size was smaller. Unsurprisingly, the big deals in Q1 went to companies working on broader AI solutions.
In three months, 904 investments were made in fintech startups. His $430 million funding for Monzo was the largest raise of the quarter. And Bilt Rewards' $200 million Series C ranked third. U.S.-based companies were the largest recipients of capital, raising a total of $3.3 billion in 393 deals during the quarter. Europe is not far behind, with European startups raising $2.2 billion in 203 deals during the same period. The significantly lower number of deals in Europe indicates larger round sizes across the region compared to the US.
In contrast, in the first quarter of 2023, $16 billion was pumped into 1,271 fintech startups. This means that the total amount raised this year has decreased by 54.3% compared to the same period last year. More significantly, $32.9 billion was poured into 2,026 fintech startups in the first quarter of 2022. The amount raised and the number of deals are also down compared to Q4 2023, when 786 fintech startups raised $8.7 billion.
Only six new fintech unicorns were born in the first three months of this year.
Overall, venture funding rose 11% sequentially to $58.4 billion, while deals fell 7% to 6,238 deals, the eighth consecutive quarterly decline.