Looking at the State of Fintech

May 10, 2022

Perhaps the hottest area in venture capital and private equity is financial technology (Fintech). Private equity data provider Pitchbook is out with their take on the state of fintech. Here’s a look.

A Timeline

Before looking into more detail on the state of fintech, here’s a timeline of events we saw in the first quarter of this year.

  • January 7th: PayPal confirms they are developing a stablecoin known as “PayPal Coin”. The code was found within its iPhone app. PayPal’s confirmation follows other major corporations, such as Visa, in developing stablecoin.
  • January 22nd: The Diem project – originally known as Facebook’s Lira project – sold its technology assets to Silvergate for around $200 million.
  • January 31st: FTX brings in $400 million in a Series C funding found at a whopping $32 billion post-money valuation. As constant observers well know, crypto companies’ valuations continue to skyrocket.
  • March 9th: President Biden calls for researching and supporting digital assets, including further research on a U.S. central bank digital currency. Over 90 countries are evaluating or piloting similar projects.
  • March 21st: The SEC proposes rules that would require public companies to report carbon emissions and the climate impact of their businesses.
  • March 22nd: Forge Global, a marketplace for exchanging of private company shares, finishes a deSPAC deal, making it one of the largest VC exits during the first quarter.

Some Numbers on the State of Venture Capital

Released in the report was Pitchbook’s take on the first quarter numbers. Overall, they reported 1,233 total deals, quarter-over-quarter decline of 3.7%, year-over-year decline of 6.5%, and year-to-date growth of 39.9%.

Switching to deal value, Pitchbook found $29.3 billion in total deal value, a quarter-over-quarter decline of 7.3%, a year-over-year growth of 13.8%, and a year-to-date growth of 113%.

Times, they are not too bad.

Source: Pitchbook

Fintech Venture Capital Deal Activity

Shifting to the state of VC deal activity, judging solely by the performance of deal activity through the first three months of this year, it’s unlikely that the 2021 performance will be matched. Last year, we saw 5,236 fintech deals, a massive jump from 2020’s 3,278. As mentioned, so far through the first three months, fintech has seen 1,233. If the first quarter trend holds, 2022 will mark the second-best year of fintech deal activity ever in terms of both deal counts and deal value. Deal value reached $29.3 billion through the first quarter of this year, while total deal value in 2021 reached an astonishing $122 billion.

Source: Pitchbook

Summing Up

Overall, deal activity in the fintech world is healthy, very healthy, although nowhere near the 2021 heyday trends. If the current trends continue, 2022 will be another strong fintech investing year – the second-best ever.

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