Global funding for fintech startups has reached its lowest point in seven years, experiencing a 16% decrease between the fourth quarter of 2023 and the first quarter of 2024. This decline is surprising considering the overall 11% increase in venture funding across various sectors.
CB Insights, an analytics firm, recently released its quarterly VC report, which highlighted the activity in the first quarter of 2024. The firm described the quarter as a “mixed bag for the venture market,” noting the negative trend of eight consecutive quarters of decline in equity deals. However, this was somewhat offset by a few significant deals, such as Amazon’s $4 billion investment in Anthropic AI.
According to the report, venture funding for the first quarter of 2024 amounted to $58.4 billion, representing an 11% increase compared to the fourth quarter of 2023, which recorded $52.8 billion. While this indicates a potential rebound, the overall market is still down 21% compared to the first quarter of 2023 and 62% compared to the first quarter of 2022.
The decline in funding is reflected in the number of new billion-dollar startups, with only 19 emerging in the first quarter of 2024, compared to 23 in the previous quarter, marking a 17% decrease to start the year.
Unfortunately, the fintech sector did not perform as well as other venture capital sectors in the first quarter of 2024. Funding in this sector experienced a 16% decline between the fourth quarter of 2023 and the first quarter of 2024, bringing it back to the levels of 2017. This decline in fintech funding in the United States, the primary geographic funding arena for venture capital in this sector, coincided with increased scrutiny from the Federal Deposit Insurance Corporation (FDIC) regarding banking relationships with fintech companies.
On the other hand, the first quarter of 2024 witnessed remarkable achievements in the crypto market. Bitcoin reached unprecedented highs, and the total market cap for all cryptocurrencies reached $2.9 trillion, although it decreased to $2.71 trillion in the second quarter. This surge in the crypto market occurred just before the upcoming Bitcoin halving. Some analysts predict that Bitcoin’s price could increase by as much as 160%, reaching around $150,000, while others view the halving as a “sell the news” event.