FT Partners Research publishes their Q1 2023 FinTech Insights report, providing a comprehensive review of global Fintech deal activity “with analysis across private company financings, IPOs, and M&A transactions.”
While still feeling the prolonged impact from high inflation and rising interest rates, turbulence in the banking industry “added another wrinkle to the FinTech deal activity environment in Q1 2023.”
As noted in the report by FT Partners, the social-media-fed bank runs and subsequent collapse of Silicon Valley Bank and Signature Bank “caused volatility throughout the banking industry in March and undoubtedly disrupted the tech and startup ecosystems that these banks served.”
While the overall banking environment appeared to stabilize relatively quickly, “the longer-term impact of the demise of these two banks is less clear.”
Despite the turmoil and ongoing challenges in the market, Q1 2023 private FinTech company financing volume “rose 53% sequentially to $17.7 billion, up from $11.6 billion in Q4 2022, and broke a string of three consecutive quarters of declines.”
To be fair, Stripe‘s $6.5 billion Series I round – the second largest FinTech funding round ever – “accounted for more than one third of the total financing volume in the quarter.”
As mentioned in the update shared by FT Partners, “very few US-based consumer FinTech brands raised money in Q1, with the majority of capital going to B2B and FinTech infrastructure or back-office-focused businesses across a variety of FinTech sectors, while outside of North America, some large direct-to-consumer companies announced significant capital raises.”
The actual number of financing rounds also “picked up sequentially in Q1 2023 (794 deals) compared to Q4 2022 (681 deals), but still remained below the heightened activity levels reached in 2021 and early 2022.”
The uptick in deals “was primarily led by a steadier stream of early-stage and smaller-sized deals with 46% of all financing rounds in the quarter raising less than $5 million.”
With very few large deals, M&A volume in Q1 only “reached $9.2 billion, the lowest level since Q2 2020 ($9.1 billion), when the world was reeling from COVID-19 shutdowns.”
As noted in the update shared with CI, $1 billion+ FinTech M&A deals “were scarce in Q1 with just two announced – the fewest since Q2 2013.”
While announced dollar volume fell significantly in the quarter, “the number of deals (299) increased slightly over Q4 2022 (257), yet still remained lower than the quarterly average overall from 2021 and 2022 (342 deals).”
As covered, FT Partners’ data, analytics, and insights on FinTech “stem from their deep domain knowledge and the Firm’s proprietary database, which has been meticulously and methodically compiled.”
The FT Partners Research Team “assembles and curates this information through primary research and it represents years of focus and diligence.”
To view the complete report, check here.