Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
H1 2023 Fintech Investment Landscape: Top 10 Global Markets
Innovate Finance | Jul 4, 2023
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.
See: Marqeta 2023 State of Payments Report: Rise of P2P Payment and Embedded Financial Services, & Hybrid Future?
- 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
| Rank | Country | Capital Invested H1 2023 | Deals H1 2023 | Average Deal Size H1 2023 | Capital Invested H1 2022 | % Change YoY |
|---|---|---|---|---|---|---|
| 1 | United States | $15.6B | 663 | $23.5M | $25.1B | ⬇ -37.8% |
| 2 | United Kingdom | $2.9B | 199 | $14.6M | $9.1B | ⬇ -68.1% |
| 3 | China | $1.7B | 35 | $48.6M | N/A | N/A |
| 4 | Singapore | $0.8B | 72 | $11.1M | $2.1B | ⬇ -61.9% |
| 5 | India | $0.6B | 83 | $7.2M | $3.9B | ⬇ -84.6% |
| 6 | France | $0.7B | 41 | $17.1M | $2.3B | ⬇ -69.6% |
| 7 | Germany | $0.5B | 33 | $16.2M | $2.4B | ⬇ -79.2% |
| 8 | Switzerland | $0.5B | 38 | $13.2M | N/A | N/A |
| 9 | South Korea | $0.4B | 38 | $10.3M | N/A | N/A |
| 10 | Canada | $0.3B | 47 | $6.4M | $0.8B | ⬇ -62.5% |
Source: Innovate Finance | H1 2023 | H1 2022
See: NatWest Group’s Vision for the Future of Open Banking and 3 Potential Ways Forward
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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