Global fintech funding down in 2022: S&P

S&P Global expects fintech funding to rebound in 2023

Results from the S&P Global Market Intelligence’s Global Fintech Funding Trends report show that funding for financial technology firms fell to $63b last year.

In the final quarter of 2022, only 599 rounds worth $8b were recorded. This was 4.5 times less than 2021’s $26b (1,000 rounds).

S&P Global said 2022 was a challenging year for the macro environment, which likely influenced the sentiments of venture capitalists (VC) and startups.

However, S&P Global expects “investor rotation into B2B and out of B2C to accelerate in 2023.

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Venture capitalists may shift to less populated economies of the world where traditional finance is almost non-existent.

 Fintech models such as payment orchestration, cross-border payments, sweep networks, and revenue financing could be attractive to VCs in such regions. Additionally, middleware players who operate within the embedded finance sector could also be viewed as a safe investment.

Leading global markets witnessed downturns in 2022. Latin America faced the biggest drop at 59%, followed by North America at 34%, EMEA at 19% and APAC at 25%.

The proportion of VCs invested in various countries is somewhat linked to the share of the global gross domestic product (GDP). 

However, the distribution is highly biased towards the US, the UK, and India. Despite accounting for only one-third of the global GDP, these three markets attracted over 50% of fintech investments between 2021 and 2022.

Notably, the Indian fintech sector managed to raise US$3.62b, smaller than the $5.76b raised previously.

The Southeast Asian region, which includes Singapore, Indonesia, Malaysia, Thailand, the Philippines, and Vietnam, has become the fourth most significant destination for prospective fintech VCs. The region attracted around US$5.4b, which is roughly the same amount as the previous year.