The first six months of 2024 were challenging for the global fintech market given the high interest rate environment and geopolitical uncertainties.
Global investment in fintech fell “from 62.3 billion dollars to 51.9 billion dollars during this period.”
While VC investments in the USA and the Asia-Pacific region “fell only slightly between the second half of 2023 and the first half of 2024, they flattened out more significantly in Europe from 19.1 billion dollars to 11.4 billion dollars.”
These are the findings of the latest KPMG “Pulse of Fintech”, for which data from Pitchbook was analyzed.
Investments in German fintechs stabilize at a low level
With 51 deals and a volume of around 482.1 million US dollars, the German fintech ecosystem bucked “the negative trend in Europe and recorded some promising investments.”
Compared to the investment volume from the second half of 2023, investments in fintechs on the German market “increased by 19%, while they fell in France (-50%) and the UK (-29%), for example.”
Nevertheless, the situation remains tense and the investment level “from the first half of 2023 could not be reached again in the first six months of the current year.”
Persistently high capital costs and geopolitical uncertainties “are also slowing down global investment this year.”
The fintech market has not been spared, “with investors continuing to act cautiously.”
However, the general conditions in the European Union are developing positively. New regulations such “as the EU AI Act could provide more clarity and transparency in the use of AI and make investments in AI-related fintechs more attractive.”
Interest in artificial intelligence drives investment
In line with a global trend, AI was very popular “with fintech investors in the first half of 2024, particularly in North and South America.”
There were four major AI-focused deals in the USA alone. In Germany, the focus was also on investments in AI-related fintechs, which “accounted for the largest share of the investment volume with a total of eight deals.”
Other investment priorities in Germany were fintechs “with business models in the B2B payments and Software-as-a-Service (SaaS) sectors.”
Regardless of the sector, the overall economic environment “appears to be placing a greater burden on larger fintechs with high capital requirements in Germany.”
In contrast, young fintechs were able to “raise significantly more capital from investors in seed and early-stage financing rounds.”
Corporate venture capital investments “are playing an increasingly important role here.”
CVCs have established themselves as a key player “on the German venture capital market, with the investment volume in this area increasing by 81% compared to the first half of 2023.”
