Venture capitalists’ enthusiasm for fintech, which ranked as the hottest sector for startup investment last year, is showing signs of waning.
In the past two weeks, a total of 51 fintech companies across the globe collectively raised $1.1 billion in seed through late-stage venture funding, per Crunchbase data. That’s down about 63 percent from the prior two-week period, during which 80 companies raised just shy of $3 billion.
The slowdown in funding over the past two weeks is particularly significant in contrast to last year. For 2021, financial services 1 was the leading sector for venture investment, with $134 billion invested, marking a whopping 177 percent year-over-year growth. Seed to late-stage funding to fintech companies alone totaled around $64 billion.
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Public offerings in the fintech space also rose last year, including at least 20 debuts on U.S. markets, which are listed here. Since then, a large portion have posted lackluster to poor aftermarket performance.
Of course, fintech isn’t alone in posting declines. We’ve been documenting a series of pronounced declines in funding announcements in the wake of Russia’s invasion of Ukraine, which commenced on Feb. 23. Global venture funding announcements roughly halved in the following days, while disclosed investments to EU companies fell more steeply.
The Ukraine attack may be driving some reticence around publicizing funding rounds, but there appear to be other cyclic factors at play as well. In addition to geopolitical tensions, inflation, expected interest rate hikes, public market weakness and a seemingly never-ending pandemic are starting to affect the private markets, venture capitalists recently told Crunchbase.
Illustration: Li-Anne Dias
The Crunchbase financial services category includes multiple sub-sectors and is not limited to fintech.↩
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