Fintech segments

The first six months of 2023 were difficult for the fintech market globally, with both total funding and the number of deals dropping, from US$63.2 billion across 2,885 deals in H2’22 to US$52.4 billion in across 2,153 deals in H1’23. The cloud of uncertainty permeating the market continued to wear on investors, driven by factors including global macroeconomic concerns (high inflation and rising interest rates), geopolitical tensions (the ongoing conflict between Russia and the Ukraine), and tech sector challenges (depressed valuations and a continued lack of exits). The collapse of several US banks early in 2023 likely also kept many investors in wait and see mode during H1’23. Click below to read the highlights from the fintech segments:

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Payments | Insurtech | Wealthtech | Cybersecurity | Regtech | Blockchain/Crypto

Payments deal activity slows amidst global macroeconomic uncertainty

After two years of incredibly robust funding, the global payments space saw both deal value and deal volume decline significantly in H1’23. Ongoing fears of a global recession, high inflation, and rapid increases to interest rates in many jurisdictions likely contributed to the major slowdown, in addition to the continued downward pressure on valuations. Mature and stable markets — particularly the US and Europe — attracted the vast majority of payments-focused funding during H1’23 as investors prioritized risk-averse deals. 

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Insurtech funding bounces back; H1’23 total nearly exceeds 2022 results

After a large drop-off in funding last year, total funding in insurtech bounced back in in the first half of 2023, with H1’23 funding nearly exceeding 2022’s total. While funding remained well off pace of the banner years seen in 2020 and 2021, the funding is very positive given the declining funding levels in other areas of fintech. The $2.6 billion buyout of Duck Creek Technologies by Vista Equity partners helped strengthen funding in H1’23 significantly; the second largest deal of H1’23 was the $570 million acquisition of benefits administration company Benefitfocus by Voya Financial. 

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After record-shattering 2022, VC investment in regtech slows in H1’23

After soaring to a major record high in 2022, total funding in regtech slowed in H1’23. The largest deal in H1’23 was the $155 million acquisition of US-based turnkey crypto platform Apex Crypto by Bakkt; the platform’s features range from clearing and custody activities to tax services. California-based Accounts Payable automation start-up Tipalti also had a large raise in H1’23, pulling in $150 million funding. Europe also attracted a series of large deals in the regtech space, led by a $129 million VC raise by UK-based data intelligence firm Quantexa, a $77 million series A raise by UK-based Yonder, and a $53 million raise by Netherlands-based identity management-focused firm Fourthline. In the ASPAC region, Australia-based all-in-one banking-as-a-service platform Constantinople’s $21 million seed round accounted for the largest regtech deal of H1’23. 

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Wealthtech investors hold back in H1’23 amidst global uncertainty

Total funding in wealthtech was incredibly soft in H1’23 — not a surprise given the range of factors driving uncertainty in the global market, both within the fintech sector and beyond. The only $100 million+ deal in H1’23 occurred in the US —the most mature of the wealthtech markets globally; a $100 million raise by Avenue One — a platform geared to simplifying funding in single-family rentals. 

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Global YOY funding in cybersecurity tracking above 2022 at mid-year

Cybersecurity funding globally was very solid in H1’23 — on pace to surpass 2022 totals, although the level of funding remained far below 2021’s outlier record high. The number of deals in the cybersecurity space was substantially lower in H1’23 compared to H2’22 , likely reflecting the desire of PE and VC investors prioritizing a smaller number of more certain bets. The largest deals of the quarter included a $493 million VC raise by France-based digital asset security firm Ledger and a $250 million acquisition of Switzerland-based cryptocurrency custody firm Metaco by US-based settlements firm Ripple

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Funding in crypto and blockchain falls back to Earth in H1’23

After two years of incredible funding, the crypto and blockchain space saw funding fall dramatically in H1’23, although funding levels remained on par with 2020 results. Like the tech sector more broadly, the crypto and blockchain space saw investors pulling back in the wake of growing economic uncertainty, including ongoing concerns about a potential recession, high interest rates, and the significant pressure on valuations. The collapse of several crypto-focused companies during 2022 also affected investor confidence; the subsequent increasing focus on due diligence and governance likely slowed the speed of crypto deals even further. 

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