Funding drought continues, but not for crypto
Global fintech firms have been struggling to raise capital as the post-pandemic funding frenzy comes to an end.
Fintech funding has now hit its lowest level in nearly seven years after a quarter-on-quarter dip of 16% in Q1 2024, according to a report by CB Insights.
Fintech firms raised a total of $7.3bn in Q1, down from $8.7bn in the fourth quarter of 2023. However, the number of fintech funding deals has increased from 786 in Q4 2023 to 904 in Q1 2024.
The global financial technology sector witnessed a boom in valuations and funding after the pandemic as quarterly funding reached as high as $39bn in Q4 2021.
During the boom, Revolut raised $800m and received a valuation of $33bn in July 2021. US-based Robinhood, which made its IPO debut in July 2021, saw its valuation jump to $32bn.
However, a challenging macroeconomic environment in 2022 and the rise of crypto pushed investors away from the fintech sector. Compared with $144bn raised by fintech firms in 2021, the sector attracted $80bn in 2022 and roughly $40bn in 2023. With $7.3bn in funding during the first quarter of 2024, hopes are not high for the rest of the year.
The fintech sector’s loss is slowly turning out to be a gain for crypto as the emerging asset class is attracting big bucks. Venture capital investments in crypto firms jumped 32% quarter-on-quarter in Q1 to $2.5bn, according to a report by Bloomberg citing PitchBook data.
Venture capital arms of crypto exchanges have also been very active in the first quarter amid a surge in the prices of digital assets. OKX Ventures, the venture capital arm of digital asset trading platform OKX, topped CB Insights’ fintech corporate venture capital list as the firm invested in a total of 21 companies during the first quarter.
Revolut’s valuation
Speaking of valuations, Revolut has become one of the few fintech firms to witness an uptick in value in recent months. Schroders, one of Revolut’s shareholders, has raised the valuation of its stake by 45%, meaning the fintech is now valued at $25.7bn, up from $17.7bn in 2023 but still below $33bn in July 2021.
Wise’s stock price
Shares of London-based fintech firm Wise were in the spotlight on 16 April after the company posted its financial results for the fourth quarter.
Despite a jump in revenue and active customers, the firm’s shares fell as much as 9% during the morning trading session on 16 April. However, Wise CEO Kristo Käärmann remained optimistic about the fintech’s performance and called the recent period a “strong quarter” for the firm.
Checkout.com eyes growth in China
City fintech Checkout.com, which was valued at $40bn in 2022, is now eyeing China for Asia expansion. Checkout.com is hiring for roughly a dozen roles in its Shanghai office, a company spokesperson said.
Backed by Tiger Global and Franklin Templeton, Checkout.com is currently in talks with more than 100 large-scale Chinese merchants to provide its services.
In other news
Revolut secures Mexico banking licence in remittance play
Goldman Sachs’ David Solomon: AI is an ‘unprecedented’ opportunity
CVC IPO plans: What you need to know
Recommended reading
Microsoft to invest $1.5bn in Abu Dhabi AI group G42 (Financial Times)
Should UK investors have easier access to crypto? (Financial Times)
Standard Chartered arm takes stake in British fintech Algbra (Sky News)
To contact the author of this story with feedback or news, email Bilal Jafar
