Fintech is no longer a priority for VC investors as global venture funding slows down

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A recent “State of Venture Q2’22 Report” from CB Insights revealed a spectacular decline in the global venture ecosystem. Fintech startups received a reduced portion of total funding. Now their capital share is near the Q4’20 benchmark – less than one-fifth.?

Last year, financial services were the leading sector attracting venture investment. Throughout 2021, fintechs received $134 billion from the VC segment. It was an astonishing 177% year-over-year growth. However, venture investing slowed down significantly in 2022. The main reasons are bearish sentiment in public markets, record-high recession, and global economic uncertainty. Late-stage and technology growth investing has been the most impacted.?

For fintechs, funding dropped 33% quarter-over-quarter, reaching $20.4 billion. In Q1 2022 it also shrank by 21%. The decline took place in all major global regions. Fintechs operating in the battered crypto market contributed to the falling funding trend. Amidst the ongoing crypto winter and contagious bankruptcies, investors consider them as high risk.?

Overall, venture funding invested $108.5B across 7,651 deals last quarter. It was the most substantial quarterly percentage drop in the number of contracts and the second-largest decline in funding in a decade.?

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