Total global investment in fintech fell from $62.3 billion across 2,287 deals in H2’23 to $51.9 billion across 2,255 deals in H1’24.
According to figures compiled by KPMG, VC investment declined in all key regions; while the US and Apac saw modest declines between H2’23 and H1’24 — from $38.5 billion to $36.7 billion in the Americas and from $4.6 billion to $3.7 billion in Apac - the Emea region saw a more significant drop from $19.1 billion to $11.4 billion.
The figures show the UK as an outlier, where fintech investment tripled on the back of a slew of major funding rounds and buyouts.
Total UK fintech investment came in at $7.3bn over the six months, up from $2.5bn in the preceding period.
“The high cost of capital and geopolitical uncertainty linked to conflict and elections, have put a significant damper on all global investments so far this year, and the fintech market isn’t immune to that,” says Karim Haji, global head of financial services, KPMG International. “Investors are acting cautiously, not only when it comes to large transactions, particularly on the M&A front, given concerns about valuations and the profitability of potential targets, investors are focussed on improving the companies they already own rather than buying new.”
Fintech investment is expected to remain subdued in H2’24 given the high interest rate environment and resulting high cost of capital, in addition to the approach of the US presidential election. There is some optimism that deal volume will continue to increase, but average deal sizes will likely remain small compared to historical norms, says Haji.