Venture funding of Fintechs bounced along during Q3 2024, declining from Q2 and nowhere near more robust activity in recent years. This is according to S&P Global Markets, which reports that Fintech startups globally saw 370 funding rounds worth $6.4 billion in the third quarter of 2024. These numbers represent a 22% drop in round count and an 8% increase in dollar value year over year.
The total value was down 27%, and the total rounds were down 20% compared to the previous quarter.
As one would expect, the US continued to be the top location for Fintech VC, with $2.3 billion in the quarter. At the same time, the report states that the number of deals declined by 22% year over year.
The UK, a top global Fintech hub, saw funding increase by 60% year over year to $600 million. However, the number of deals declined by 14%, from 37 to 32.
India was another market that delivered positive growth in both deal value and number of deals, with funding increasing by 37% year over year to $420 million and deal count rising by 10% year over year to 34.
Payments, a long-time hot sector of Fintech, saw funding value jump by nearly 91% in Q3 to $2.35 billion, despite a 30% decrease in deal count to 79 from the year-ago quarter.
Banking technology and Insurtech saw big declines in both value and deal count, dropping 36% and 34% year over year, respectively.
Digital lending saw some growth, with value rising by 44% year over year to $1.12 billion.
Seed funding for Fintechs dropped by 26% in value year over year, while early-stage funding was down 38% as investors pumped the breaks on risk.
Sampath Sharma Nariyanuri, Senior Fintech Research Analyst at S&P Global Market Intelligence, said the decline in VC Fintech funding is indicative of the ongoing deterioration. At the same time, investors look towards more mature Fintechs with potential for growth.
“While the immediate outlook for Fintech funding may be cautious, the broader economic context, including the Federal Reserve’s rate cut cycle and the performance of public fintech stocks, presents an optimistic backdrop for the industry. Amidst these trends, several fintech firms are capitalizing on the demand for modern payment infrastructures, aiding banks in transitioning to instant payment systems. The rising significance of stablecoins and blockchain technology in cross-border transactions is also gaining traction, with multiple startups securing funding to establish comprehensive payment networks leveraging these innovations.”