The decline in funding for fintech startups is observed all over the world, all regions are affected by the process.

Business Insider reports that startups in the field of financial technologies are going through hard times, investments in such companies in the world decreased by a third in the second quarter of this year. According to research company CB Insights, fintech startups received 33% less money in  second quarter of 2022 than in the same quarter a year earlier. The total investment amounted to $20.4 billion. In the first quarter, there was also a drop, but it was less significant (minus 21%). (1)

Interestingly, the decline in funding for fintech startups is observed all over the world, and all regions are affected by the process. The number of new companies valuated over $1 billion (unicorns) dropped to 20, the lowest number in six quarters. M&A investor exits dropped 30% in the quarter, to the lowest level since the third quarter of 2020. The average transaction amount also decreased, “feeling better” by 28%, and amounted to $23 million in the reporting quarter.

Negative trends concern not only fintech startups, but also startups in general: as IT-World portal previously reported, in the second quarter of 2022, compared to the first quarter, the total volume of venture investments in the world decreased by 23% to $108.5 billion. (2)

The venture market is negatively affected by high inflation and fears of a possible recession. Startups, including those in fintech, have to tighten their belts. At the same time, there are no positive prospects, experts anticipate that the decline in venture capital funding will continue. Problems in the cryptocurrency market were superimposed on general economic problems: fintech companies that worked in the crypto market are suffering from the depreciation of cryptocurrencies. The cryptocurrency market is now considered as high-risk, respectively, and startups operating in this market, too.

For fintech startups, lower venture capital funding means cutting costs and unraveling plans to promote and scale solutions.

It is very important to be in touch with financial changes in fintech market. Especially if you are a client of one of the financial institutions.

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1 – https://www.cbinsights.com/research/report/fintech-trends-q2-2022/

2 – https://newonnews.com/global-startup-funding-fell-23-in-q2-report/