Global funding for fintech startups has reached its lowest point in seven years, experiencing a 16% decrease between Q4 2023 and Q1 2024. This decline comes despite an 11% increase in venture funding across various sectors.
CB Insights, an analytics firm, recently published its quarterly venture capital (VC) report, which highlighted the activity in Q1 2024. The report described the quarter as a “mixed bag for the venture market,” noting a continuous decline in equity deals over the past eight quarters. However, this negative trend was partially offset by a few significant deals, including Amazon’s $4 billion investment in Anthropic AI.
According to the report, venture funding in Q1 2024 reached $58.4 billion, representing an 11% increase compared to Q4 2023’s $52.8 billion. While this suggests a potential rebound, the overall market remains down 21% compared to Q1 2023 and 62% compared to Q1 2022.
The decline in funding is reflected in the number of new unicorns, with only 19 billion-dollar startups emerging in the quarter. This marks a 17% decrease from the previous quarter, which saw 23 new unicorns.
In contrast to other VC sectors, fintech did not perform as well in Q1 2024. The report reveals a 16% quarter-over-quarter decline in funding between Q4 2023 and Q1 2024, bringing the current fintech venture market in line with the levels seen in 2017. This decline in fintech funding in the United States, the primary geographic funding arena for venture capital in the sector, coincided with increased scrutiny from the Federal Deposit Insurance Corporation (FDIC) regarding banking relationships with fintech companies.
On a different note, Q1 2024 witnessed remarkable highs for Bitcoin, as well as a record market cap of $2.9 trillion for all cryptocurrencies during the quarter. However, the market cap decreased to $2.71 trillion in Q2. This significant movement in the crypto market occurred just before the next Bitcoin halving, which some analysts predict could lead to a price surge of up to 160%, potentially driving BTC’s value from around $70K to approximately $150K. Nevertheless, other analysts have recently referred to the halving as a “sell the news” event.