Funding for Fintech Startups Show Steep Decline

Funding rounds for fintech companies have shown a steep decline as experts fear a decline in enthusiasm from venture capitalists.

Financial technology is one of the aspects of new technologies that was ranked as one of the hottest sectors for startup investment last year. This is because of the unique solutions these new technologies proffered.

According to a report by Crunchbase – a data-driven platform for startups and the venture capital market – a total of 51 fintech companies across the globe jointly raised $1.1 billion in seed through late-stage venture funding in the past two weeks.

This report shows a steep decline of about 63% from the prior two-week period, during which 80 companies raised over $3 billion.

This decline is quite significantly in contrast with funding raised in the previous year where financial services were the leading sector for venture investment. In 2021, $134 billion was invested in this sector which marked a remarkable 177 % year-over-year growth. Seed to late-stage funding to fintech companies alone totalled around $64 billion in 2021.

However, fintechs aren’t the only companies experiencing this decline. There have been a number of reported declines across the globe for various other sectors as experts speculate that this decline may be as a result of the ongoing Russia-Ukraine crisis.

In Africa however, things may appear to be looking up with the recorded $1+bn in the past last two months of 2022. A record that is more than half of the total recorded funding raised in 2021 where Africa raised $2bn. Although this funding is cumulative of all sectors in Africa, it still points to a very promising year for the continent.

2022 may appear to be a promising year for Africa, however, following the attack on Ukraine, a steep decline in funding have also been outlined on the continent.

Experts believe that the attack on Ukraine by Russia may be driving some disinclination around the publicising of funding rounds globally.

However, there may be other factors being overlooked. For example, in addition to geopolitical tensions globally following the attack, there is global inflation that comes with expected interest rate hikes, public market weakness and a just maybe the seemingly never-ending pandemic is starting to affect the private markets and venture capitalist stakeholders.