Fintech in 2022: a story of falling funding, fewer unicorns and insurtech M&A

Share Story on

If you thought the fourth quarter of 2022 felt slow when it came to investment activity in the fintech space, that’s because it was. In fact, the three-month period marked the lowest quarter for U.S. fintech funding since 2018, according to CB Insights’ State of Fintech 2022 report.

But overall, while total fintech funding globally was down markedly last year compared to 2021, numbers were still higher than 2020.

Specifically, global fintech funding amounted to $75.2 billion in 2022, down 46% compared with 2021, but up 52% compared to 2020. The second half of the year was especially bleak. Only $10.7 billion of investment dollars went to fund fintech startups in the fourth quarter. About $3.2 billion of that, or nearly 30%, flowed into U.S.-based companies. 

Meanwhile, global venture funding reached $415.1 billion in 2022, marking a 35% drop from a record 2021.

Overall, fintech deal volume fell 8% globally year-over-year to 5,048 in 2022. Notably, Africa was the only major region to see deals climb compared to 2021 – with a record 227 deals in 2022, a 25% increase year-over-year. A staggering 89% of 2022 deals in Africa were early-stage – a 5-year high for the continent and the highest among all other regions.

Still, funding on the continent remained lower than 2021 levels, noted Anisha Kothapa, CB Insights’ lead fintech analyst.

“This is due to increased access to technology in the region such as mobile devices and internet connectivity,” she wrote via email. “Currently, there’s a large proportion of Africa’s population that doesn’t have adequate access to financial products compared to other regions, so the potential deployment of fintech solutions exploded as access to technology like mobile phones and internet increased. 

In the U.S, fintech funding in 2022 was down 50% to $32.8 billion. Yet deal size was only down 9%, signaling another trend we saw last year: early-stage deal share continued to dominate. On the flip side, mega round funding and deals fell 60% and 52% year-over-year, respectively. 

Kothapa wasn’t surprised by the overall drop in investment activity given the macro-economic environment and recovery from COVID, which resulted in higher inflation and the Fed raising interest rates. 

“2021 was a unique year that resulted from digital transformation needs during the pandemic,” she wrote. “However, on the positive side, 2022 numbers were higher than 2020. Therefore, investors did not shy away from giving capital. Instead, funding was given more to smaller, earlier-stage deals versus bigger, later-stage deals like we saw in 2021.”

Notably, the world saw a drastic decline in the number of new unicorns  in 2022. Fintech specifically saw a total of just 69 total unicorn births in 2022, “a huge drop” (58%) compared to 166 births in 2021, according to Kothapa.

“This drop in unicorn births [for fintech] was actually smaller than what we saw for all VC-funded companies in 2022,” she told TechCrunch. “Unicorn births for all VC-backed companies dropped 86% year-over-year. 

Other interesting tidbits from the report:

  • Insurtech M&A exits surged by 40% in 2022 to 81, up from 58 in 2021. Despite a poor showing in the public markets, insurtech was the only fintech sector to see a year-over-year increase in M&A exits. Overall, global fintech M&A exits dipped 20% year over year to a total of 742. We also saw a 72% YoY decline in fintech IPOs, from 82 in 2021 to just 23 in 2022. There were no IPOs or SPACs in the insurtech space in all of 2022 for the first time since the second quarter of 2020.
  • After a record-setting year, funding to LatAm & Caribbean-based fintechs declined 71% from $13.9 billion in 2021 to $4 billion in 2022. This was the greatest percentage drop in fintech funding for any region year-over-year. However, deals only fell 5% YoY – the lowest regional drop along with Canada.
  • Average global deal size dropped 40% to $18.7 million

While some are saying that 2022 saw a popping of the fintech bubble, Kothapa disagrees.

“This was more of a correction that resulted from an unforeseen event like the pandemic,” she said. “Digital transformation is extremely important for organizations now as they navigate more seamless ways to operate and fintech is a huge part of any business’s digital transformation.”

Want more fintech news in your inbox? Sign up here.

Got a news tip or inside information about a topic we covered? We’d love to hear from you. You can reach me via Signal at 408.404.3036. Or you can drop us a note at tips@techcrunch.com. If you prefer to remain anonymous, click here to contact us, which includes SecureDrop (instructions here) and various encrypted messaging apps.)

Fintech in 2022: a story of falling funding, fewer unicorns and insurtech M&A by Mary Ann Azevedo originally published on TechCrunch



Search By Category

Recent News

You May Also Like

Dynamic Cables Reports Highest Ever Nine Months Revenue

Dynamic Cables Reports Highest Ever Nine Months Revenue

        Nine Month Revenue up 25% YOY         Featured in Wire & Cable India Magazine         Awarded with “Pride of India Award 2023” Jaipur (Rajasthan)

Symrise launches naturals brand Maison Lautier 1795

Symrise launches naturals brand Maison Lautier 1795

—        Lautier heritage and cutting-edge innovation of Symrise combined —        Building of factory in Grasse, returning Lautier to its roots —        Focus on artisan sustainably

Traders Guruji is Promoting Inclusivity in the Indian investment Arena Through Their Fintech Services

Traders Guruji is Promoting Inclusivity in the Indian investment Arena Through Their Fintech Services

Bhubaneswar (Odisha) [India], February 8: Stock markets evolved considerably over the last several decades from simpleton broker tradings in the 12th century. Currently, the entire stock market industry

“13teen: A Premium Men’s Clothing Brand on the Rise”

“13teen: A Premium Men’s Clothing Brand on the Rise”

13teen, a Premium Men’s Clothing Brand on the Rise New Delhi (India), February 8: ‘13teen,’  a premium men’s clothing brand founded in 2020 in Pune,

H.E. Sheikh N M Al Nahayan presents Golden Excellence award to Satish Sanpal

H.E. Sheikh N M Al Nahayan presents Golden Excellence award to Satish Sanpal

New Delhi (India), February 8: Golden Excellence in Entertainment was presented in gratitude to Satish Sanpal under the Patronage of H.E. Sheikh Nahayan Mabarak Al Nahayan,

Mr. Ajay Kakar: The man spearheading Parasoft to new heights

Mr. Ajay Kakar: The man spearheading Parasoft to new heights

New Delhi (India), February 8: Ajay Kakar is now a name to reckon with. He was recently awarded as the most promising entrepreneur by non-other