Fintech Funding Dips to 7-Year Low in Q1 2024 Amid Record Crypto Highs
Summary:
Fintech venture funding has seen a 16% drop to a seven-year low in Q1 2024, despite an overall 11% increase in venture capital across sectors, according to a report by CB Insights. The report also noted an 11% quarter-over-quarter increase in venture capital, even though the market is down 21% and 62% against Q1 2023 and Q1 2022 respectively, and reflected a 17% decrease in number of new unicorns. Specifically, fintech funding levels mirror 2017 trends, amid increased scrutiny by the FDIC. Meanwhile, the cryptocurrency market reached record peaks with Bitcoin experiencing unprecedented highs.
In a seven-year low, fintech ventures globally have experienced a 16% decrease in funding between Q4 2023 and Q1 2024, contradicting a general increase of 11% in venture capital across sectors. This data comes from the latest quarterly report by analytics company CB Insights, which depicted Q1 2024 as a mixed bag on the venture market stage. Despite the negativities contributed by the consistent downtrend in equity deals for eight quarters, a collection of significant transactions including Amazon's $4 billion backing of Anthropic AI helped balance the scales.
Venture capital for Q1 2024 amounted to $58.4 billion as per the report, marking an 11% quarter-over-quarter increase compared to Q4 2023's $52.8 billion. While this could suggest a potential bounce-back, it's worth noting that compared to Q1 2023 and Q1 2022, the market is still down by 21% and 62% respectively.
The drop echoed in new unicorn occurrence — billion-dollar startups — with a mere 19 making it in Q1 2024, down about 17% from the 23 in the previous quarter.
As per the report, fintech didn’t achieve as much success as other sectors in attracting venture capital during Q1 2024, recording a 16% quarter-over-quarter fall between Q4 2023 and Q1 2024, returning the current fintech market to the level it was at in 2017. This decrease occurred in tandem with heightened scrutiny from the Federal Deposit Insurance Corporation (FDIC) into fintech firms' banking liaisons in the U.S., the dominant arena for fintech sector venture capital investment.
Simultaneously, Bitcoin and the whole cryptocurrency market experienced record-breaking highs in Q1 2024, with the entire cryptocurrency market cap peaking at $2.9 trillion for the quarter, dipping slightly to $2.71 trillion in Q2. A dramatic market fluctuation is anticipated before the next Bitcoin halving, where some experts forecast a surge of up to 160% — potentially driving Bitcoin's price from its current $70K mark to an estimated $150K. However, not all analysts believe in this optimism, with some naming the halving as a potential sell-off event.
Published At
4/9/2024 8:55:00 PM
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