According to KPMG’s latest report, global fintech funding experienced a decline in the first half of 2023, reaching $52.4 billion. This represents a 17% decrease from the Global fintech funding recorded in the second half of 2022, which was at $63.2 billion. The United States emerged as the dominant recipient of fintech investment during this period.
KPMG’s Pulse of Fintech report for H1 2023 highlights a challenging market environment for the global fintech industry, marked by uncertainty that affected investors. Factors contributing to this situation include high inflation, rising interest rates, geopolitical tensions, challenges faced by the tech sector (such as depressed valuations and limited exits), and the collapse of several US banks. These conditions have collectively impacted the overall activity and investment in the fintech sector during the first half of 2023.
EMEA and APAC funding falls
The Europe, Middle East and Africa (EMEA) region saw its total fintech funding for H1 2023 come in at $11 billion, less than half the $27 billion it saw in H2 2022.
The UK accounted for over half this amount, attracting $6 billion in funding, while other regions “lagged far behind” the UK’s results. However, KPMG adds that several countries attracted deals over $250 million, including France, Switzerland and Mauritius.
Fintech funding in the Asia Pacific (APAC) region dropped from $6.8 billion in H2 2022 to $5.1 billion in H1 2023, a “far cry” from the more than $45 billion it saw in H1 2022. The largest funding deal in APAC in H1 2023 was the $1.5 billion secured by Chinese consumer finance company Chongqing Ant Consumer Finance.
Not all bad news
Investment activity in the US makes up a big chunk of the total global funding, with its $34.9 billion accounting for more than two-thirds of the $52.4 billion seen globally. The US also accounts for five of the seven deals worth more than $1 billion, including the $8 billion acquisition of Coupa by Thoma Bravo.
KPMG states that payments also remains the “top fintech sub-sector”, accounting for $16.2 billion in funding globally in H1 2023. Top deals include the above-mentioned Coupa buyout, the $6.9 billion raise by Stripe, and the $4 billion acquisition of EVO Payments by Global Payments.
In terms of growing fintech sub-sectors, KPMG shines a spotlight on supply chain and logistics, which took away $8.2 billion of the funding seen in H1 2023, a record annual high. Green fintech also faired well, raking in $1.7 billion in funding – which is more than its total 2022 result.
Other sectors with strong funding in H1 2023 include insurtech ($4.7 billion) and B2B fintech ($3.7 billion).
