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Oct 31, 2022

The World of Fintech: Startup Genome Fintech Report 2022

We do a steady breakdown of Startup Genome's latest Global Startup Ecosystem Report: Fintech Edition

BY
Keane Angle
Louise Saludo

Introduction

Not even a global pandemic can stop the rise of Fintech.

In recent years, the growth of the Fintech industry has accelerated due to the increasing use of digital payments and web3. The pandemic created a bigger need for digital transactions while the mainstreaming of crypto and NFTs paved the way for new blockchain technologies.

By 2021, 138 Fintech startups achieved unicorn status, representing a 6.5x growth from 2020.

North America produced the majority of Fintech unicorns at 49%, followed by Europe at 22% and Asia at 19%.

But, what are key trends in the Fintech landscape and how is it changing in 2022? Here’s a summary of the key highlights from Startup Genome’s Global Startup Ecosystem Report: Fintech Edition.

2022 Fintech Activity by Region

Currently, the top five Fintech ecosystems are Silicon Valley, New York City, London, Singapore, and Hong Kong. The latter came in as the newest entry into the top five, with Startup Genome noting that this is partly due to the number of Fintech-focused accelerators and incubators.

Silicon Valley Bay Area

Sitting at the apex of Fintech ecosystems, Silicon Valley remains #1 with $105B in capital flow in 2021, 2x larger than its 2020 total. Due to the large concentration of entrepreneurial talent within the area, it continues to offer the best networking opportunities with many startup-focused events. Recent rounds within the area include Course Hero’s $380M Series-C in December 2021 and Aptos’ monster $200M Seed round in March 2022

Source: Startup Genome 2022

New York

Considered America’s second-largest tech hub, New York-based VC firms raised an estimated $55B in 2021. The New York Fintech ecosystem witnessed two of the largest traditional IPOs by deal size: UiPath and Oscar Health Insurance.

Source: Startup Genome 2022

London

Europe’s startup capital has raised an all-time high of $25.5B in VC funding in 2021 — more than doubling its 2020 figure. Local VCs have started to focus on backing European tech companies; Balderton Capital raised a $600M fund in November 2021. The flood of investment also created 20 new unicorns in 2021.

Source: Startup Genome 2022

Singapore

Its fast-rising middle class and pro-business environment have made Singapore an attractive startup hub. Singapore’s Department of Statistics and Enterprise shows nearly 4,000 startups, 220 VCs, and 200+ accelerators in the area. The region saw 11 unicorns in 2021 and generated 52% of all equity funding within Southeast Asia. Its government continues to support startups as it allocated $211.80M in 2020 to support emerging businesses.

Source: Startup Genome 2022

2022 Acceleration in Payments

Payments are the product segment of startups developing tech focused on digital money-movement opportunities. Startup Genome notes that the growth of these startups was heavily accelerated by

Regarding the largest product segments in Fintech, Payments hold the top spot. Consequently, blockchain and crypto maintain rapid growth, as illustrated below:

Source: Startup Genome 2022

This next chart on the other hand shows us that, while Payments are maturing in Europe and North America, the market is still growing rapidly in Africa, Latin America, and MENA.

Source: Startup Genome 2022

Startup Genome also points out that Series-A funding has steadily risen across all product segments, except for Consumer Finance, with blockchain seeing a significant rise in Series-B+ deal count in H1 2022.

2022 Fintech Exits

In 2021, all top four exits were in Fintech. These exits made up 61% of the total value of global fintech startups. Fintech exits were 92% lower in H1 2022 vs H1 2021— meaning exits were a mere 8% away from zero. Startup Genome notes that this reflects two huge exists from that year: Coinbase at $86B and NBPL startup Affirm at $15B.

Meanwhile, AI & Big Data (BD) were up 5% in Series-A deal counts. AI & BD also had a +104% exit count.

2022 Fintech Funding

Lastly, 2021 was an impressive year for both Fintech unicorns and Series-A funding. In the chart below, we can see the rise of Fintech unicorns throughout 2021. 138 startups achieved unicorn status in 2021. Startup Genome notes this as due to a 6.5x growth compared to 2020.

Source: Startup Genome 2022

Source: Startup Genome 2022

As shown in the chart above, Africa, North America, and Latin America were the top markets that saw Series-A growth with the latter growing by nearly 200%.

Fintech fundraising is increasing, but the late-stage deal size is decreasing.

Fundraising has shown to be rapidly increasing despite the recent pandemic; however, deal sizes have started decreasing. This is illustrated in the charts below:

Source: Startup Genome 2022

Source: Startup Genome 2022

These charts also illustrate that, while the median funding amount for Series-A and Series-B+ rounds in the first half of 2022 is on par with the back half of 2021, total deal volume has decreased.

Conclusion: Fintech continues to explode.

Trends within the industry such as fewer, larger deals show that investors see the growth potential.

However, the industry is slowing down in 2022 and according to CNN Business’ confidence index, investors are less confident due to the state of global economies. This is slowing down market momentum, leading investors to disperse funds less in recent years.

However, Fintech will continue to grow as the world moves toward cashless transactions and crypto technology.

The future of Fintech remains bright as many startup founders think of different ways to innovate the space.

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