The global fintech scene is currently experiencing a fascinating period with an intriguing duality between a marked decline in funding and a spectacular rise in mergers and acquisitions. While startups struggle to find financing, consolidation is becoming a key strategy, with large companies seizing opportunities to acquire undervalued assets. This dynamic offers a unique panorama to analyze, where each movement can potentially redefine the contours of the industry.
In 2024, the global fintech sector saw a reduction in funding, showing an 8% decline compared to the previous year. Fintech companies raised a total of 50.3 billion USD through 272 transactions in December 2024. Nonetheless, the total number of deals surged by 28%, highlighting growing interest in smaller transactions.
Meanwhile, a notable increase in mergers and acquisitions was observed, with a total transaction value reaching 183.1 billion USD, representing a 79% year-over-year increase. This trend highlights the emphasis on consolidation and efficiency, with larger companies benefiting from undervalued assets.
Cryptocurrency and blockchain dominated funding activity with 1,021 transactions, accounting for 26.6% of all fintech funding rounds. However, the largest fundraising efforts were made in other sectors, such as credit technology and wealth management.
Decline in Funding in the Global Fintech Sector
In 2024, the global fintech sector witnessed a notable decrease in its funding. According to a report from Financial Technology Partners, the total value of funding dropped by 8% compared to the previous year. This decline reflects a more cautious adoption by investors who are now focusing on more promising and resilient projects against economic disruptions.
Surge in Mergers and Acquisitions
In contrast to the decline in funding, a true surge in mergers and acquisitions shook the fintech sector in 2024, recording an increase of 79% compared to the previous year. This intensification of M&A activities indicates a shift towards consolidation and efficiency. Large companies, with access to significant capital, often take advantage of the opportunity to acquire undervalued or struggling assets.
Tendency Towards Smaller Transactions
Although the total number of transactions increased by 28%, highlighting a continued interest in innovation and agility, transactions have generally tended towards smaller sizes. This suggests a scenario where investors remain active but with a preference for lesser financial commitments, focusing on secondary projects while minimizing risks.
