Sampath Sharma Nariyani, senior fintech research analyst at S&P Global Market Intelligence notes that “the decline in fintech-focused venture capital (VC) investment during 3Q2024 reflects a further deterioration in the funding landscape”.
“However, the ongoing interest in larger deals suggests that investors are strategically pivoting toward companies with established scalability and potential for growth,” she adds.
In 3Q2024, the largest funding round was Philippines-based Globe Fintech Innovations which raised US$786 million in aggregate from domestic conglomerate Ayala Corp. and Japanese bank Mitsubishi UFJ Financial Group.
According to the report, the US remains the top destination for VC among all the key fintech hubs, with funding value keeping steady at US$2.3 billion.
See also: SmartBiz is first fintech to become bank under Trump administration
However, the report notes that deal count has fallen significantly by 22% y-o-y in 3Q2024.
Despite this, the report notes that the UK saw a 69% increase in funding y-o-y, growing to US$600 million, despite a 14% y-o-y drop in deal count from 37 to 32. India also saw positive growth in both deal value and count, with funding increasing by 37% y-o-y to US$420 million and a 10% y-o-y growth in deal count to 34.
With regards to various segments, payments saw funding value increase nearly 91% in 3Q2024 to US$2.35 billion, despite a 30% decrease in deal count to 79. Digital lending also experienced growth, with value increasing by 44% y-o-y to US$1.12 billion, despite a slight decrease in deal count.
See also: Chocolate Finance CEO says disabling of AXS payments was 'communicated poorly'
“Several fintech firms are capitalizing on the demand for modern payment infrastructures, aiding banks in transitioning to instant payment systems,” Nariyani notes.
In contrast, banking technology and insurance technology saw a significant fall in value and deal count, declining 36% and 34% y-o-y, respectively.
The report adds that seed funding fell by 26% y-o-y in value and early-stage funding decreased by 38%. Mature-stage funding also declined 35% in value and saw a fall in deal count by one-third to 72.
On the other hand, the report found that growth-stage funding value grew exponentially by 81% to around US$2.65 billion and deal count increased by 19% to 74.
Furthermore, compression in round stages appears to be easing for fintechs at all stages, especially in growth, as average ticket sizes increased by 52%, the report says.
Looking ahead, Nariyani notes that 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.
