The Asia-Pacific (APAC) region has emerged as a significant hub for startups in the financial technology (fintech) industry over the past few years, with increasing number of venture capitalists (VCs) investing in the space.
However, the region's fintech startups are currently facing a funding slump, with all funding stages, including early-stage (Seed and Series A) and growth, expansion, and late-stage (Series B onwards), contributing to the overall decline in 2022, reveals GlobalData, a leading data and analytics company.
An analysis of GlobalData’s Financial Deals Database reveals that a total of 400 VC funding deals with disclosed funding rounds were announced in the fintech space in the APAC region during 2022. This included 273 early-stage funding rounds and 127 growth, expansion and late-stage funding rounds. While early-stage funding rounds’ volume registered a year-on-year (YoY) decline of 14.4%, the number of growth, expansion and late-stage funding rounds were down by 12.4%.
Aurojyoti Bose, Lead Analyst at GlobalData, comments: “The decline in the number of growth, expansion, and late-stage funding rounds in the APAC fintech space is relatively less compared to the decline observed in early-stage rounds. This is noteworthy, as investors are becoming increasingly cautious in the face of volatile market conditions. This is especially relevant given that growth, expansion, and late-stage funding rounds typically involve higher capital investment.”
Early-stage funding rounds dominated the APAC VC funding landscape in fintech space in terms of volume, accounting for 68.3% share in 2022 while growth, expansion and late-stage VC funding rounds’ share stood at 31.7%.
Most of the VC funding rounds announced in the APAC fintech space registered decline in 2022 compared to the previous year. However, Series D funding rounds emerged as a notable exception and witnessed growth in deal volume.
Meanwhile, India witnessed the announcement of the highest number of VC deals with disclosed funding rounds in fintech space, followed by Singapore, South Korea, Indonesia, Australia, Japan, China and Hong Kong.
Bose concludes: “The APAC fintech space has become increasingly competitive, making it challenging for startups to secure funding. In addition, investors have become more cautious about investing in high-risk ventures, including early-stage fintech startups. As a result, fintech startups must reevaluate their strategies and search for innovative ways to overcome the funding slump.”