FinTech Funding Falters in Second Quarter of 2022

Following a record-breaking year in 2021, FinTech deals have taken a tumble so far in 2022. In fact, in Q2, the total amount of funding among startups in the sector fell to a six-quarter low. Similarly, other metrics such as the number of unicorn “births” were also down.

According to the latest CB Insights report, FinTech funding totaled $20.4 billion in the second quarter of 2022. That’s not only down 33% from Q1’s $30.3 billion total but is also off 43% year over year. The quarter was the lowest since Q4 2020 — although this most recent timeframe’s total still far outpaced the $13.1 billion recorded back then.

The dip in total funding also corresponded to a decrease in the number of deals. CB Insights recorded 1,225 for Q2 compared to 1,482 during the previous quarter. That said, the figure wasn’t too far off from Q1 or Q2 2021, which saw 1,239 and 1,287 deals done respectively.

As noted, the number of new unicorns created during Q2 2022 was also down significantly from previous quarters. Between April and June of this year, 20 FinTech startups reached valuations of $1 billion or more compared to 36 companies hitting the milestone in Q1. The drop was even more severe when compared to the second quarter of 2021 when 48 new FinTech unicorns were created.

Looking even more closely at the data, it was discovered that the average deal size is down in 2022 compared to 2021 — although the median is currently the same. So far this year, the mean deal size sits at $23 million, while last year’s ended at $32 million. Meanwhile, both year’s observed a $5 million median deal amount.

Despite the lower overall total, there were still plenty of big FinTech deals that closed during the quarter. Leading the way, Singapore’s own Coda Payments saw a $690 million Series C in April. They were followed by Velocity Global’s Series B and Circle’s venture round, which each totaled $400 million. Bloom’s $378 million Series A and SumUp’s $312 million Series E rounded out the global top five.

Overall, the pullback in the FinTech funding might sound drastic. Naturally, these foreboding feelings are only exacerbated by talk of recession and issues in certain sectors of FinTech, such as crypto and “buy now, pay later.” However, put in context, it’s clear that funding is still far ahead of what it was only two years ago. So, while 2022 might not break 2021’s record, it should still end up in a respectable second place.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Amex Launches Digital B2B Payments Platform Business Link

For consumers, these days, there's no shortage of peer-to-peer apps they can use to move money, with some popular examples including Cash App, Venmo, and Zelle. As for businesses, the list of options for sending money to vendors may be more limited. Now, a well-known credit card company and small business supporter is introducing a new platform for this purpose. This week, American Express announced the launch of Amex Business...

Carbon Credit API Cloverly Joins Visa's FinTech Partner Connect 

Last year, Visa introduced the FinTech Partner Connect program to the United States, with the goal of introducing institutions to vetted startups that could help them expand their product offerings. Now, the latest company to join the program is Cloverly. Founded in 2019, Cloverly is an API for carbon credits, allowing businesses and consumers to help fight climate change. As the company points out, with the Visa partnership, Visa clients...

Prosper Announces $75 Million Growth Capital Financing

A long-admired FinTech has added some new capital to its coffers and it continues to grow after more than 15 years in business. Recently, Prosper Marketplace announced that it had closed a $75 million debt financing round. This capital came from a fund managed by Neuberger Bergman and will be used to help Prosper meet the demand for its loans, credit card, investment products, and more. According to the company,...