Fintech funding on track for new records this year
Fintech investors didn't get the note about the growth stock pullback. Some $18.2 billion in funding flowed to fintech companies in the first month-and-half of 2022, putting in on track to beat last year's historical record, per a Friday report from Citi Global Insights.
Why it matters: Companies in the space attracted a record $136.8 billion last year and market observers wondered if those nosebleed levels of funding could hold. The numbers so far suggest investors are emphatically saying yes.
Driving the news: Through last week, 2022 fintech funding trended 20% above all of January to February 2021, with mega deals from the likes of FNZ, Citadel Securities, and Checkout.com driving the numbers.
Between the lines: Not all fintech is the same. Crypto has had the biggest gains this year, with $4.1 billion raised compared to about $800 million in the first two months of last year. That crowned it as the second hottest sector so far this year behind wealth management.
- In the first two months of 2021, U.S. companies dominated with 64% of the pie. This year, Europe (32%) is giving America (39%) a run for its money.
Yes, but: Many of these deals likely priced in 2021, when valuations were still hot and the threat of interest rate hikes more distant. Private markets are after all a few quarters delayed compared to public markets.
- Yes but, but: There's near-record amounts of dry powder across the private equity industry in need of deployment, with specialized funds focused on crypto popping up left and right.
The bottom line: The jury is still out on whether fintech funding will actually notch a new record this year. But, if there is a slowdown, it could be more of a controlled drop than a mass implosion.
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