Fintech Decoded: 1H23

Fintech deal activity in 1H23 witnessed a period of notable turbulence, with subsectors such as Payments+ and Blockchain/Crypto receding, while Business Solutions and Financial Markets domains gained prominence.

While venture capital funding experienced a substantial decrease in value, deal volume remained remarkably robust throughout this timeframe. Projections based on the current funding trajectory suggest that 2023 could potentially rank as the third-highest year in terms of total investment, following the precedent set by the years 2021 and 2022.

The economic landscape was greatly influenced by the surge in U.S. inflation, the Federal Reserve's withdrawal of stimulus measures, and a sequence of interest rate hikes contributing to a fragile economic environment marked by the impending gloom of recession. Regulatory uncertainties from GDPR, China's cryptocurrency ban, and geopolitical tremors like the Russia-Ukraine conflict added further complexity.

Venture capital investors displayed a noticeable shift towards directing their attention to angel and seed-stage companies while taking a more rigid stance towards early and late-stage VC firms due to increased valuations arising from the 2021 surge. In this edition of Fintech Decoded, we bring you insights into the sector’s performance following the macroeconomic headwinds, along with notable funding trends across the globe in the fintech space in 1H23.