Global fintech sector sees decline in funding in first half of 2022

5 days ago

Image: © Engdao/Stock.adobe.com

A KPMG report has highlighted that investment in Irish fintechs dropped by 70pc in the first half of 2022 to $259m.

The first half of this year has seen a decline in investment for the global fintech sector, with both the value and number of deals falling since the second half of 2021, according to a KPMG report.

Total fintech investment in the EMEA region dropped $5bn to $26.6bn between the second half of last year and the first half of this year – driven by a decline in the deal value of mergers and acquisitions. M&A deal value in EMEA dropped from $15.7bn last year to $7.2bn in the first half of this year.

Globally, investment in fintech fell from $111.2bn across 3,372 deals in the second half of 2021 to $107.8bn across 2,980 deals in the first six months of 2022. This was led by a decline in investment and deals volume in the Americas and EMEA regions, while Asia-Pacific attracted record high investment.

The KPMG Pulse of Fintech report on the first half of 2022 blamed the decline in investment on factors such as uncertainties related to the conflict in Ukraine, ongoing supply chain issues and rising inflation and interest rates.

Payments was the fintech segment with the highest share of investment at the start of this year ($43.6bn). Other big segments included crypto, cybersecurity, insurtech and regtech.

“Heading into the second half of 2022, market challenges are expected to continue, with investors increasingly focusing on top-line revenue growth, profitability, and cash flow,” the report reads.

“M&A activity is well positioned to grow as mature sectors see consolidation and investors look for attractive deals amidst the downward pressure on valuations and as some start-ups contemplate alternatives to downrounds.”

Irish fintech investment down 70pc

Despite a global decline in VC investment in fintech, the EMEA region set a new record in the first half of this year.

VC funding in EMEA stood at $16.6bn, led by the two largest fintech rounds in the world in the first six months of 2022 – a $1.1bn raise by Germany’s Trade Republic and a $1bn raise by the UK’s Checkout.com.

Overall investment in Irish fintechs dropped by 70pc in the first half of 2022 to $259m.

This marked a steep decline from the record-breaking figure of $900m in the first half of last year, which KPMG attributed to a drop in the large individual deals that drove last year’s record investment.

The two biggest Irish deals so far this year were Wayflyer’s $150m Series B round and TransferMate’s $70m round, both of which gave the start-ups unicorn status.

“While [the first half of 2022] saw numerous challenges that affect the broader investment market, fintech investment is expected to remain somewhat resilient,” said Anna Scally, partner and fintech lead at KPMG in Ireland.

“However, deals could take longer to complete as investors become more critical of opportunities.”

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Vish Gain is a journalist with Silicon Republic

editorial@siliconrepublic.com