In the EMEA region alone, the fintech sector has seen a drop of $5 billion in funding according to a KPMG report. Investments in Irish fintechs fell by 70 percent.
The first half of this year has seen a slowdown in investment for the global fintech sector with both the value and number of deals falling since the second half of 2021, according to a KPMG report.
Total fintech investment in the EMEA region fell $5 billion to $26.6 billion between H2 last year and H1 this year – driven by a decline in M&A deal value. The value of M&A deals in EMEA fell by more than half from $15.7 billion last year to $7.2 billion in the first half of this year.
Globally, investment in fintech fell from $111.2 billion on 3,372 deals in H2’21 to $107.8 billion on 2,980 deals in H1’22. This was led by a decline in investment and deal volume in the Americas and EMEA regions, while Asia-Pacific attracted record annual investment.
The KPMG Pulse of Fintech report for the first half of 2022 blamed the decline in investment on factors such as uncertainty related to the conflict in Ukraine, ongoing supply chain issues and rising inflation and interest rates.
Payments was the fintech segment with the highest share of investments in the first half ($43.6 billion) followed by crypto ($14.2 billion). Other major segments include cyber security, insurtech and regtech.
“During the second half of 2022, market challenges are expected to continue, with investors increasingly focusing on top-line revenue growth, profitability and cash flow,” the report said.
“M&A activity is well positioned to grow as mature sectors see consolidation and investors look for attractive deals amid downward pressure on valuations and as some start-ups consider alternatives to downturns.”
Irish fintech investment down 70pc
Despite a global decline in VC investment in fintech, Europe set a new record in the first half of this year.
The EMEA region saw a new record funding level for a six-month period ($16.6 billion) led by the two largest fintech rounds in the world in H1 2022 – a $1.1 billion increase from Germany’s Trade Republic and an increase of 1 billion by UK’s Checkout.com.
Investment in Irish fintechs fell by 70 percent in the first half of 2022 to $259 million, according to data from the report seen by The Irish Times. This is due to a drop in the large individual agreements that drove last year’s record high figures.
During the pandemic, the Irish fintech sector saw a record period of activity with $328.6 million in transactions recorded in the first half of 2020.
“While [the first half of 2022] with so many challenges affecting the wider investment market, fintech investment is expected to remain somewhat robust, Anna Scally, partner and fintech leader at KPMG in Ireland, said of the latest report.
“But it may take longer to complete deals as investors become more critical of opportunities.”
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