FinTech Funding Activity Lower Middle Market The FinTech industry is poised for a resurgence. While funding in 2024 reached $3.7 billion across 257 deals, reflecting the impact of the banking tech sector fallout 1 and the challenging global environment, this period of cautious investment is likely to foster a more sustainable and robust ecosystem for future growth. Key trends: • Investor Selectivity: Investors in 2024 were highly selective, favoring companies with strong differentiation and revenue potential. • GenAI Advantage: Companies leveraging GenAI are attracting significant interest, especially those addressing industry-wide problems like financial crime prevention and cybersecurity. • Normalized Valuations: Valuations have normalized from the 2021 peak, and early- stage companies will need to focus on strong founding teams and innovative technologies to secure funding . As global economic conditions stabilize following recent rate cuts and the US elections, the FinTech industry is poised to experience a renewed wave of investment. To navigate this evolving landscape, FinTech companies will increasingly leverage AI to optimize operations, reduce costs, and enhance profitability. By demonstrating strong financial performance and innovative use of technology, FinTechs can position themselves for future funding rounds and long-term success.
FinTech Funding by Year – Lower Middle Market (In millions of USD)
Total Deal Size in ($M) # of Deals
804
693
449
365
257
$6,292
$12,002
$9,810
$4,991
$3,746
2020
2021
2022
2023
2024
FinTech Funding Volume by Quarter – Lower Middle Market
217
(In millions of USD)
Total Deal Size in ($M) # of Deals
203 214 202
201
172
165
123
116 109 99
106 108
87 82 83 79 80
55
42
Source: Pitchbook as of 31 December 2024. Data consists of transactions where deal value was disclosed. Note: Companies valued between $5 - $150 million were considered lower middle market. 1. Synapse, a BaaS provider, collapsed in 2024, resulting in significant customer losses and prompting increased regulatory scrutiny on the fintech industry. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2020 2021 2022 2023 2024
23
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