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Data Snack: How was Q2 2022 for fintech investments?

  • Fintech investment in Q2 2022 was the lowest in five straight quarters, at $21.5 billion.
  • Unicorn creation in fintech dropped down near pre-pandemic levels in Q2, with just 25 new unicorns being formed globally.

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Data Snack: How was Q2 2022 for fintech investments?

With drying investments, crumbling valuations and increasing layoffs, is the year 2022 one of reckoning for fintech?

Let's look at some numbers from Dealroom's new report on the state of fintech funding in Q2 2022.

Global VC funding in fintech has fallen drastically since the start of the year. In Q2, fintech startups managed to raise just $21.5 billion – the lowest in five quarters. That figure represents a 39% decrease from the highest amount, at $35.3 billion in Q4 2021, and a 32% decrease YoY, from $31.6 billion in Q2 2021.

In Q2 2022, megarounds of $100 million and above were also at their lowest in five quarters. They made up a mere 40% of total investment, down 40% from their peak in Q3 of last year. 

Q2 2021 saw a total of 87 megarounds. This number peaked at 104 the following quarter. From then on, it started falling, to 88 and 89 in the last quarter of 2021 and the first of 2022, respectively. It then plunged in Q2 2022 to just 62.

Furthermore, unicorn creation has also continued falling, to almost pre-pandemic levels now. 25 fintech unicorns were formed in Q2 2022, less than half of the 57 that were formed in the peak of Q3 2021.

Globally, the five biggest rounds in Q2 2022 were:

  • Coda Payments – the Singapore-based digital content monetization platform.
    • $690 million was raised in April 2022, with investments from Smash Capital, Insight Partners, and GIC.
    • The firm is worth $2.5 billion.
  • Velocity Global – the Denver-based global employee management fintech.
    • A $400 million Series B was raised in May 2022, with investment from Norwest Venture Partners and Eldridge.
    • The firm is worth $2 billion.
  • Circle – the Boston-based international payment solutions provider, and issuer of USDC.
    • The firm raised $400 million in April 2022, with investments from BlackRock, Fidelity, Marshall Wace, and Fin Venture Capital.
    • The firm is worth $9 billion.
  • Bloom – the British revenue-based financing platform for SMBs.
    • A $377 million Series A was raised in May 2022, with investments from Credo Capital Management and Fortress Investment Group.
    • The firm is worth between $1.6-2.4 billion.
  • SumUp – the London-based SMB card payment solutions provider.
    • Raised $312 million in late VC funds, from Bain Capital Tech Opportunities, BlackRock, btov Partners, Centerbridge, and Crestline.
    • The firm is valued at $8.5 billion.

The total number of funding rounds has seen a less significant drop than that of megarounds. So while big money investments are decreasing, fintechs still have a potential way into VC wallets. In Q2 2022, 752 funding rounds were completed, as against 850 in Q2 2021 – showing an 11.5% decline.

Even with the decrease in funding, fintech remains one of the most heavily invested of all industries. In Q2 2022, VCs invested $20.5 billion in fintech globally. That’s more than many other giant industries, like health ($18.3 billion), energy ($15.8 billion), transportation ($8.5 billion), security ($6.8 billion), and marketing ($6.7 billion).

However, in terms of growth in investment, fintech lags far behind. In Q2 2022, fintech witnessed a 32% decrease in investments YoY. In the same duration, the three industries that actually saw an uptick in VC investment were transportation (105%), gaming (48%), and real estate (13%).

Within fintech, VCs were found to be most interested in investing in payments, crypto & DeFi, and financial management solutions. However, funding in all these categories saw a general decrease YoY.

As we soon finish up Q3 2022, things might begin taking a turn for the better. Experts have predicted that fall will bring an uptick in fintech investments, with inflation starting to decrease in Q4.

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