Inflation, increased interest rates, geopolitical instability, and other macroeconomic challenges brought US and UK fintechs 36% and 63% less money last year, respectively.
The annual report from the Indian market intelligence platform Tracxn revealed that the highest-funded fintech ecosystem in the world – one of the US – has received $28.5B in 2023, witnessing a sharp funding decline of 36% compared to $18.2B raised in 2022.
Meanwhile, the situation with the UK fintech is even more illustrative of the global investment slump, with $4.3 billion raised in 2023, a 68% fall down from the $11.2 billion in funding registered the previous year. In 2022, fintech funding in the UK remained ahead of the levels seen in Europe and Asia amid a sharp global slowdown but still decreased about 8% compared to its 2021 value.
In 2023, 172 acquisitions and two IPOs took place in the US. The number of acquisitions was substantially down from 247 in 2022 and 319 in 2021. However, the UK experienced only a marginal decline, from 70 in 2022 down to 66 acquisitions last year. In 2021, the country registered 95 acquisitions.
A total of 899 funding rounds were observed in the US in 2023, declining by 39% compared to the 1467 rounds witnessed in 2022. At the same time, the number of $100 million+ funding rounds fell to 19 last year, significantly down from 70 in 2022.
While late-stage funding in the US was least affected by the funding decline, losing only 18% year-on-year, the UK late-stage fintech startups witnessed a fundamental drop of 60%. The US fintech observed a similar decline in seed-stage investments, though. The funding in this category fell 59% from $3.2 billion to $1.3 billion in 2023.
The highest funding in 2023 was observed in the first quarter of the year. In fact, funding into US fintech companies rose 42% to $13.2 billion in H1 2023 when compared with H2 2022. Nevertheless, the slump of the second quarter profoundly affected the general yearly picture. Investments stood at $5 billion in H2 2023, 62% lower than the amount raised in H1 2023.
In the course of the year, only four new Unicorns emerged in the US fintech space in 2023, a sharp contrast from 29 in the previous year. These are Kin, SageSure, Lendbuzz, and Vestwell. The startups which crossed the $1 billion valuation mark in 2023 have raised at least $200 million each during the year.
Payments, Investment Tech, and Finance & Accounting Tech stood apart as the top-performing segments based on funding in the fintech space in 2023.
