Global fintech funding rose to $15 billion in Q1 2022, marking a 55% growth from Q4 2021, according to CB Insights. The research firm revealed that mega-rounds, or funding rounds of $100 million and above, saw substantial growth, increasing by 179% in the quarter, across 16 deals and a total of $9.2 billion.
However, CB Insights says that without Stripe’s single round of $6.5 billion, fintech funding would amount to $8.5 billion, or a 12% drop from the prior quarter. On a positive note, early-stage funding hit a new high, accounting for 72% of deal share in Q1.
The United States grabbed the largest share in overall funding – a whopping $10.5 billion – which is triple the prior quarter. Furthermore, US early-stage deal share also grew to 68%, marking a five-year high. The payments sector saw the most significant jump, with funding rising by 200% to $8.1 billion in Q1 compared to $2.7 billion in Q4 2021.
However, the quarter only saw one unicorn created, with MNT-Halan raising $260 million at a $1 billion valuation. Nonetheless, the overall unicorn count still grew by 11%.
Fintech M&A exits also rebounded, with an increase of 15%, but for most top deals, the companies involved were outside the US.
Fintech funding continues to boom, with exponential growth over the past few years. The COVID-19 pandemic amplified its growth, with consumers rapidly adopting digital payment methods, and companies rapidly adopting work and e-commerce methods to accommodate a remote workforce. This shift demonstrated the need for more digital payment options, accounting for the payments sector’s growth.
Stripe’s single round of $6.5 billion – the largest fintech funding round ever – helped drive Q1 funding higher than the previous quarter, proving that massive funding is still present in the industry. The rise of mega-rounds, notably for later-stage firms, reflects increased investor confidence in up-and-coming fintech companies that have gained traction and delivered impressive results.
Early-stage funding comprises the bulk of deals, showing more focus on seed-stage companies. This trend suggests that investors are still interested in finding emerging companies with prospects for significant growth in the years to come. Additionally, the U.S. has maintained its grip on the global fintech scene, underscoring the country’s strength in the sector.
In conclusion, Q1 2022 was successful for the global fintech industry, demonstrating its continued vitality despite the ongoing pandemic. Although Stripe’s massive fundraising round heavily influenced Q1 figures, the industry’s overall trend indicates continued investor confidence and a push towards innovation.
Despite ongoing challenges, including increased regulation and competition, fintech remains a vital component of the financial industry’s future, particularly in terms of digital payments, e-commerce, and remittances.
