Global fintech investment falls to $51.9 billion, but deal volume offers optimism

• Americas attracts the lion’s share of fintech investment in H1’24—with $36 billion
• Payments accounted for the largest proportion of fintech investment in H1’24, attracting $21.4 billion.
• Regtech sees $5.3 billion in investment—well ahead of 2023’s annual high at mid year.

The first six months of 2024 were challenging for the fintech market globally amid the high interest rate environment and the significant amount of global geopolitical uncertainty. Total global fintech investment—including VC, PE, and M&A deal value—fell from $62.3 billion across 2,287 deals in H2’23 to $51.9 billion across 2,255 deals in H1’24. VC investment declined in all key regions; while the US and ASPAC saw modest declines between H2’23 and H1’24—from $38.5 billion to $36.7 billion in the Americas and from $4.6 billion to $3.7 billion in ASPAC—the EMEA region saw a more significant drop from $19.1 billion to $11.4 billion.

The decline in deal value was partly due to the decline in large deals as fintech investors showed significant caution with their investments. According to the H1’24 edition of KPMG’s Pulse of Fintech—during the six-month period, only five $1 billion+ fintech deals occurred globally, including the buyouts of US-based Worldpay for $12.5 billion, Canada-based Nuvei for $6.3 billion, US-based EngageSmart for $4 billion, UK-based IRIS Software Group for $4 billion, and Canada-based Plusgrade for $1 billion. The largest VC deal globally in the fintech space was a $999 million raise by UK-based Abound.

Despite the decline in total investment, regional deal volume provided a hint of optimism. While deal volume globally dipped slightly, the decline was driven entirely by a decline in deal volume in EMEA—from 804 in H2’23 to 689 in H1’24. Comparatively, the Americas saw deal volume rise from 1,066 to 1,123, while ASPAC saw it rise from 406 to 438 in ASPAC.

“The high cost of capital and geopolitical uncertainty linked to conflict and elections, have put a significant damper on all global investments so far this year, and the fintech market isn’t immune to that,” said Karim Haji, Global Head of Financial Services, KPMG International. “Investors are acting cautiously, not only when it comes to large transactions, particularly on the M&A front, given concerns about valuations and the profitability of potential targets, investors are focussed on improving the companies they already own rather than buying new.”
 

H1’23 – Key Highlights

• Total global investment in fintech fell from $62.3 billion across 2,287 deals in H2’23 to $51.9 billion across 2,255 deals in H1’24.
• In the Americas, total investment fell from $38.5 billion to $36.7 billion between H2’23 and H1’24—including from $35 billion to $27.4 billion in the US— while in EMEA it fell from $19.1 billion to $11.4 billion, and in ASPAC it dropped from $4.6 billion to $3.7 billion.
• Fintech deal volume in the Americas rose from 1,066 to 1,123 deals between H2’23 and H1’24—including from 866 to 916 deal in the US—while it rose from 406 to 438 deals in ASPAC; deal volume dropped in the EMEA region from 804 to 689 deals.
• Global M&A deal value was $32.6 billion across 264 deals globally in H1’24. The Americas attracted $26.8 billion across 130 deals, EMEA attracted $5.5 billion across 102 deals, and ASPAC attracted $310 million across 31 deals.
• Global VC investment was $18.3 billion in H1’24, of which the Americas saw $9.3 billion—including $7.6 billion in the US—EMEA saw 5.4 billion, and ASPAC saw $3.4 billion.
• Global PE investment was just $979.5 million in H1’24. The US accounted for all $568.9 million in PE investment in the Americas, while EMEA saw $402.8 million, and ASPAC saw just $7.8 million.
• Corporate CVC investment accounted for $8.5 billion in VC investment in H1’24, including $4.4 billion in the Americas ($3.6 in the US), $2.23 billion in the EMEA region, and $1.7 billion in ASPAC.
• Payments accounted for the largest proportion of fintech investment in H1’24, attracting $21.4 billion.
• Regtech investment reached $5.3 billion at mid-year—already well ahead the $3.4 billion seen during all of 2023.
   

Interest in AI heating up in fintech space

Mirroring a trend seen globally, AI was quite hot in the eyes of fintech investors in H1’24, particularly in the Americas. The US in particular saw four large AI-focused deals; cyber insurance company Corvus was acquired by Travellers for $427 million, compensation-focused platform Spiff was acquired by Salesforce for $419 million, corporate management company Ramp raised a $150 million VC round, and investment management platform FundGuard raised a $100 million VC funding round. China-based AI-powered sustainability data company MioTech also raised a $150 million VC round in H1’24.

After a slow 2023, investment in payments and regtech rebound

After a very quiet year of investment in 2023, both the payments sector and the regtech sector saw VC investment rebound quite solidly in H1’24. The payments space attracted $21.4 billion in investment during H1’24, compared to the $22.7 billion seen during all of 2023, while regtech attracted $5.3 billion in investment, compared to just $3.4 billion during all of 2023. Meanwhile, insurtech investment dried up significantly in H1’24—attracting $1.6 billion in investment—less than one-quarter of the $8.2 billion seen in 2023.
 

Americas sees small drop in fintech investment; number of deals rises

Fintech investment in the Americas was $36.7 billion in H1’24—down slightly compared to the $38.5 billion in H2’25. The US accounted for $27.4 billion of this investment, including the $12.5 billion acquisition of Worldpay by GTCR, the $4 billion buyout of B2B customer engagement platform EngageSmart by Vista Equity Partners, the $930 million acquisition of financial research firm Tegas by AlphaSense, and the $685 million VC raise by capital markets platform company Clear Street.

Fintech investment in Canada reached a record high of $7.8 billion for a six-month period in H1’24, driven by the $6.3 billion acquisition of payments firm Nuvei by Advent International and the $1 billion buyout of revenue solutions firm Plusgrade by General Atlantic. Meanwhile Brazil had a quiet quarter of fintech investment, attracting just $616 billion in H1’24 compared to $1.8 billion in H2’23.

ASPAC region sees slowest quarter of investment since Q3’17

Fintech investment in the ASPAC region fell from $4.6 billion in H2’23 to $3.7 billion in H1’24. Much smaller deal sizes accounted for the decline, with a $280 million VC raise by China-based capital markets solutions firm Yi’an Enterprise accounting for the largest deal of the quarter, followed by a $209 million VC raise by India-based personal loan platform KreditBee, a $195 million VC raise by Thailand-based digital financial solutions firm Ascend, and $150 million VC raises by China-based ESG financial solutions firm MioTech and Australia-based performance management firm Camms.

EMEA region sees 40 percent drop in fintech funding

Fintech funding in the EMEA region fell 40percent, from $19 billion in H2’23 to just $11.4 billion in H1’24. Continued geopolitical uncertainty, including elections in the EU, UK, and France, combined with the high interest rate environment kept investment quite subdued. The UK accounted for the largest share of fintech investment in the EMEA region ($7.3 billion), including the $4 billion buyout of financial software company IRIS Software Group by Leonard Green, the $999 million VC raise by SMB marketplace platform Abound, and a $621 million raise by neobank Monzo. Outside of the UK, the largest deals included the buyout of Italy-based payments firm Banco BPM Gruppo for $652 million and the acquisition of Switzerland based e-invoicing company Pagero by Thomson Reuters.

Early stage deals provide most optimism heading into H2’24

Fintech investment is expected to remain subdued in H2’24 given the high interest rate environment and resulting high cost of capital, in addition to the approach of the US presidential election. AI will likely be the hottest area of investment as startups work to tailor AI solutions specifically to the financial services sector. There is some optimism that deal volume will continue to increase, but average deal sizes will likely remain small compared to historical norms.

"The reality is that the overall investment total for the first half of the year was buoyed by a handful of large deals, several of which were take privates aimed at avoiding significant or further valuation loss,” said Anton Ruddenklau, Global Head of Financial Services Fintech and Innovation. “Meanwhile, the volume of early-stage deals has been thriving both because of the interest in new technologies, such as AI applications, and newer business models to meet the changing nature of the financial services sector. The rise of "platforms" continues to gain momentum as decentralization, data aggregation and ecosystem connectivity becomes mainstream.”