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H1 2023 Fintech Investment Landscape: Top 10 Global Markets

Innovate Finance | Jul 4, 2023

Innovate Finance H1 2023 Global Fintech Investment landscape - H1 2023 Fintech Investment Landscape:  Top 10 Global Markets

Despite economic slowdowns and uncertainties, the FinTech sector continues to demonstrate resilience, attracting a total of $27.3 billion across 1,711 deals globally.

Select H1 2023 Global Fintech Investment Highlights

  • Global Investment: The first six months of 2023 saw a total of $27.3 billion invested across 1,711 deals globally. However, this represents a 14% decline in global investment from H2 2022 to H1 2023, reflecting cautious investor sentiment due to economic slowdown and uncertainties.
  • UK Investment: The UK FinTech sector faced challenges like high inflation and cash flow constraints, but it continues to attract significant capital. The UK remains a top destination for FinTech investment globally, second only to the United States. The UK received more investment in FinTech than all of the rest of Europe combined.

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  • Deal Size: Despite unfavorable economic conditions, the average deal size in the FinTech sector has been increasing consistently. In H1 2023, the average deal size stood at approximately $15.9 million, showcasing the sector's resilience and potential for further growth.
  • Investment Stages: Later Stage VC attracted the bulk of capital, accounting for about 70% of the total compared to 54% for 2022 as a whole. Seed capital deals were the largest by number but only represented 6% of capital invested.
  • Top Global Markets: The United States remains at the forefront with $15.6 billion invested across 663 deals. The UK holds the second place with $2.9 billion across 199 deals. For the first time, 4 of the Top 10 markets are from Asia.
  • Female Founders: Only 10 female founded or co-founded companies completed venture deals in H1 2023, representing a very low 2.2% of venture investment in the UK.
  • Looking Forward: Despite a decline in global investment, established FinTech companies continue to adapt and encourage innovation across key areas such as open banking, B2B solutions, ESG, pensions, and financial wellbeing. Generative AI has also piqued investor interest as a key driver of financial and business solutions.

Global Fintech Investment Markets:  Top 10

RankCountryCapital Invested H1 2023Deals H1 2023Average Deal Size H1 2023Capital Invested H1 2022% Change YoY
1United States$15.6B663$23.5M$25.1B⬇ -37.8%
2United Kingdom$2.9B199$14.6M$9.1B⬇ -68.1%
3China$1.7B35$48.6MN/AN/A
4Singapore$0.8B72$11.1M$2.1B⬇ -61.9%
5India$0.6B83$7.2M$3.9B⬇ -84.6%
6France$0.7B41$17.1M$2.3B⬇ -69.6%
7Germany$0.5B33$16.2M$2.4B⬇ -79.2%
8Switzerland$0.5B38$13.2MN/AN/A
9South Korea$0.4B38$10.3MN/AN/A
10Canada$0.3B47$6.4M$0.8B⬇ -62.5%

Source:  Innovate Finance | H1 2023 | H1 2022

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Erik Mostenicky, Principal of Investment, FISV:

Whether retail or sophisticated institutional investors, there is a cautious anxiety still in the market given lack of taming of the inflation in certain western economies and historically highest interest rates since the GFC [global financial crisis].

Investment flows towards smaller fintechs as well as incumbent Asset Managers has slowed down across public market asset classes but also the alternative asset classes like PE/VC/Growth. …a normalisation will highly depend on the market response to the Central banks policies, and a recession could still turn the tables for the potential growth expectations of the market.

We will have more clarity over Q3 2023 whether we slip into several quarters of recession or recover.

In conclusion, the global FinTech sector continues to show resilience amidst economic slowdown and uncertainties. The sector is expected to evolve with opportunities for both established and emerging players. However, there is a need for improvement in areas like funding for diverse innovators.

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