Venture capitalists’ enthusiasm or eagerness to invest in Fintech platforms, which ranked as one of the most active industry segments for startup investments in 2021, is showing signs of slowing down.
During the last few weeks, a total of 51 Fintech firms secured a total of $1.1 billion (globally) in seed via late-stage venture funding, according to Crunchbase data. These numbers have declined by around 63% from the previous 2-week period, during which 80 firms acquired nearly $3 billion in capital.
The relative slowdown or decline in funding during the last two weeks is especially noteworthy when compared to the activity from last year. For 2021, financial services had been among the leading industries for attracting venture investment, with $134 billion invested, representing a staggering 177% YoY growth. Meanwhile, seed to late-stage funding to Fintechs totaled approximately $64 billion.
The update from Crunchbase also mentioned that public offerings in the Fintech sector also rose during 2021, including around 20 debuts on US markets, which can be viewed here. Since that time, a relatively large portion have recorded poor (or less than expected) aftermarket performance.
Notably, Fintech isn’t the only sector that’s not performing as well as forecasted. The team at Crunchbase has been keeping track of several noticeable declines in funding-related announcements following Russia’s unprovoked and horrific invasion of Ukraine, which began on February 23, 2022. International venture funding announcements have now halved in the following days, meanwhile, disclosed investments to European Union firms also declined considerably.
The devastating Ukraine attack might also be driving some reticence around formally announcing huge investment rounds. However, there also seems to be other cyclic factors that may be contributing to this type of market.
Along with geopolitical issues, unprecedented inflation, anticipated interest rate increases, a general public market weakness and a really long pandemic are all beginning to impact the private markets. This, according to VCs that shared insights with Crunchbase.