June 7, 2022
Fintech’s mightiest privately owned companies continued to grow over the past year, but declining investment in the industry signals stormy waters ahead. It’s turning into a sobering year for fintech. After a carnival of new unicorns and mega-funding rounds in 2021, private fintech companies are now scrambling to cut costs and stretch out the funds they have to avoid needing to raise additional money at a lower valuation (known as a “down round”). Their fear is well grounded. With publicly traded fintech companies down 50% since November, venture capitalists are putting the brakes on funding for startups in the sector; U.S. fintechs raised $13.3 billion during the first quarter of 2022, a 27% decline compared with that same period last year, according to a report by data provider CB Insights. Even more dramatic, according to the report: the median valuation of late-stage American fintechs that raised money in the first quarter of 2022 was $1.9 billion, 58% lower than those that raised funding in the last quarter of 2021.