In the first quarter of 2024, funding for fintech startups saw a 16% decline from the previous quarter, contrasting with an 11% increase in overall venture funding, which reached $58.4 billion, according to the latest CB Insights Q1 2024 State of Venture Report.
The fintech sector raised $7.3 billion during the period, marking its lowest level since the beginning of 2017.
Despite the downturn, equity deal activity in fintech experienced a 15% rise, indicating continued investor interest, particularly in payments technology.
However, the average deal size has decreased, with a shift towards larger investments in companies that are focusing on broader AI solutions.
The report detailed that fintech startups received 904 investments throughout the quarter. The United Kingdom’s Monzo Bank Ltd. secured the quarter’s largest funding round at $430 million, while Bilt Rewards garnered $200 million in its Series C round, ranking it third for the period.
American-based companies led in funding, attracting $3.3 billion over 393 deals, whereas European startups followed closely, raising $2.2 billion across 203 deals, suggesting larger average funding rounds in Europe compared to the U.S.
This year’s funding total signifies a sharp 54.3% drop compared to the first quarter of 2023, where $16 billion was invested in 1,271 fintech startups.
The data reveals a downward trend from the first quarter of 2022, which saw $32.9 billion invested in 2,026 fintech startups, highlighting a continued decrease in both funding amounts and deal numbers.
A separate report highlighted a significant downturn in funding for African startups, with $466 million raised in Q1 2024, representing a 47% decline from the same period in 2023.
Despite fintech’s historical prominence in Africa’s tech sector, the transport and logistics sector led in funding this quarter, accounting for 32% of the total value raised, overshadowing fintech’s 23%.