visimoney
TLDR:
- Fintech funding is expected to increase in 2024 following a drop in funding activity in 2023.
- Venture capital and private equity firms are showing preference for fintechs with recurring revenues.
- Venture capitalists will focus on capital-efficient growth and predictable revenue, and will likely explore investment opportunities in new geographical areas and segments.
The lull in fintech funding may be ending as venture capital (VC) and private equity (PE) fund houses show a preference for fintechs with recurring revenues after a drop in funding activity in 2023. VC flows into fintechs decreased by 42% to $35 billion in 2023, with North America and Asia-Pacific (APAC) regions seeing a decline of 27% and investment totals of $17 billion and $9 billion, respectively. Additionally, funding in Europe, Middle East, and Africa (EMEA) dropped 62% to $8 billion, while funding in Latin America fell 71% to $1 billion. However, there are signs of easing funding pressures as deal count and values stabilize. In the fourth quarter of 2023, the fintech ecosystem saw 472 rounds worth $6.7 billion, compared to 481 rounds worth $6 billion in the previous quarter. Moving forward, VC firms will continue to prioritize capital-efficient growth and predictability in revenue. Fintechs are expected to leverage artificial intelligence to introduce new products, enhance user experiences, and drive topline growth. VCs may also explore new geographical areas and segments for investment opportunities.
