Overall, funding for fintechs remained strong, even though the total dollar value declined from the record high in 2021. The $50.7 billion invested through 2,707 fintech funding rounds during the first half of this year was still more than the $49.4 billion raised in all of 2020, CB Insights said. At the same time it was less than half of the $138.8 billion raised for fintechs last year.

Fintech deal-making also ebbed in the second-quarter, and so did deal-making with mergers and acquisitions dropping 30% for the category to 181 deals worldwide, down from 257 consummated in the first quarter, the research firm said. It was also a drop from the 237 deals that were done in the second quarter last year.

The quarter-over-quarter drop in fintech fundraising rounds was the first turn downward since the second quarter of 2020, CB Insights said. That was coupled with a drop-off in overall venture dollars, both globally and in the U.S. during the second quarter.

Company sales continued to be by far the primary way by which investors are exiting their fintech investments, CB Insights said. There have been 438 fintech sales so far this year as well as 16 initial public offerings and five special purpose acquisition company exits. 

The sale of crypto firm Wyre to checkout company Bolt for $1.5 billion was the biggest deal done in a match-up of two San Francisco-based businesses. 

The biggest funding round among fintechs was for Singapore-based Coda Payments, which drew $690 million in April. Boston-based stablecoin payments company Circle tied for the second-largest sum, taking in $400 million, as did the workforce focused Denver fintech Velocity Global.

CB Insights is projecting fintech funding will be lower this year than last year, reaching just $101.4 billion as opposed to the record $138.8 billion last year. But it’s also forecasting that the number of fundraising rounds this year will exceed the count for last year with 5,414 fintechs to be funded, compared to 5,282 last year.

That trend is already showing up in the second quarter results with a decrease in the average deal size to $23 million for the first half of the year, compared to $32 million for all of last year.

The U.S. led the world in fintech funding during the second quarter, both by dollars and fundraising rounds, with $8.6 billion raised across 462 rounds, CB Insights said. Nonetheless, as was the case with most regions around the world, the amount raised in the U.S. tailed off from the first quarter.

Berlin-based Global Founders Capital moved up a notch in a ranking of top fintech venture investors to overtake New York-based Tiger Global Management and become the biggest funder of fintechs during the quarter, the research firm reported. Menlo Park, California-based Andreessen Horowitz moved up several notches to become the third-largest funder of fintechs.

By Lynne Marek on July 21, 2022
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