Global fintech funding drops 17% to $52.4bn in first half of 2023
Global fintech funding fell to $52.4 billion in the first half of 2023, down 17% from $63.2 billion in H2 2022, with the US taking the lion’s share of investment, according to KPMG’s latest report.
KPMG releases its Pulse of Fintech H1 2023 report
In the H1 2023 edition of its Pulse of Fintech report, KPMG states that the first six months of 2023 have been difficult for the global fintech market, with a “cloud of uncertainty” looming over investors.
It cites factors including high inflation, rising interest rates, geopolitical tensions, and tech sector challenges including depressed valuations and lack of exits as reasons for the decline in activity, along with the collapse of several US banks.
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).
Looking ahead
For the second half of the year, KPMG expects fintech funding to “remain relatively soft”, with no end in sight to the current macroeconomic and geopolitical uncertainties. In case the market stabilises, the firm expects the market to make a “cautious rebound”.
One area it expects to see a strong interest from investors is artificial intelligence (AI), and generative AI in particular, as companies around the world look to leverage its full potential.
“It is still very early days when it comes to the application of generative AI to use cases in financial services,” says Anton Ruddenklau, global fintech leader at KPMG.
“But looking forward, it is an area that is attracting enormous interest and funding—particularly in areas like cybersecurity, regtech, and wealthtech. Over the next six months, we’ll start to see an uptick in investors embracing the space as corporates demand ways to leverage generative AI effectively.”
