It has been widely reported that funding of private firms has been moribund for the past couple of years. There have been a few bright spots but overall, investment has not returned to the robust level seen in recent years. A report distributed today, indicates solid optimism for the Fintech industry as 91% of Fintech insiders anticipate investment will return in the next 12 months.
According to Silverflow, a survey conducted during Money 20/20 Europe indicates “incredible optimism” about the future of Fintech. Expectations are for funding to return with vigor for sectors like AI, Payments, and Open Banking.
The report notes that Fintech investment grew dramatically in the late 2010s, reaching as high as $225 billion in 2021. In 2023, investment cratered by 42% to $113 billion. While the causes are numerous, the top reasons include rising interest rates to combat inflation and concerns about the overall economy.
While there may be light at the end of the tunnel, concerns remain about inflated costs.
Additionally, there are geopolitical worries and a Presidential election in the US, which remains a whole card.
Robert Kraal, co-founder and CBDO of Silverflow, says that more investors are backing smaller firms, hoping some will become profitable – if not unicorns.
Kraal says the survey results show that Fintech has taken some hits but remains “far from out.”
“Companies that solve real problems and do so in a way that is profitable are going to come to the fore, and it looks like the industry is recognizing that. The near future should be full of some very exciting companies, some of whom we have met, and we would like to count ourselves among their number.”