Business analytics platform CB Insights released their State of Fintech 2023 Report which indicates the fintech sector experienced a greater downturn than the broader venture capital market—which reported that Q4’23 was “the harshest quarter for global VC in 6 years”.
Globally, fintech funding was down 50% year over year to $39.2 billion with deal volume declining 38% to 3,801. While the funding decline adversely impacted fintech startups, the U.S. gained a larger share of the sector with 41% of 2023 deals, the highest since 2016. This was due to investors pivoting to early-stage companies, causing U.S. early-stage deal share to reach its highest level in over a decade.
Worldwide there were eight fintech unicorns born in Q4’23, but for the first time since 2019, more fintech unicorns were born in Asia than in the US in a given quarter.
The numbers reveal the steep funding drop-off for fintech startups. Most notable was the hit taken by banking startups seeking funding which fell 72% in 2023 — the biggest YoY decrease across fintech sectors.
Payments startups saw funding decline 30% YoY, yet the sector remained the most well-funded fintech sector by a wide margin. Despite the contraction, its annual funding total was bolstered by two mega funding rounds, Stripe with $6.5 billion and Metropolis with $1 billion.
The 200+ page State of Fintech 2023 Report covering the most recent venture trends in fintech may be downloaded here.
