The news: Venture-capital-backed fintechs raised less cash in Q3 as the economic downturn led to a leaner funding climate.
Fintech funding slips further. CB Insights’ State of Venture report found:
Despite the bleak market picture, fintech funding is still healthy and remains above 2020 levels. The declines reflect the wider economic picture, with retail tech and digital health firms experiencing similar funding drops.
What fintechs can do: Overall funding for fintechs is slowing, continuing the Q2 trend and likely to drop lower before the year is out. The gloomy market outlook has led venture investors to practice stronger due diligence, aiming to be more prudent and keep costs lower. This quarter, fintechs can:
Fintech market consolidation: The unsustainably huge growth in fintech investment last year made a leveling-off in funding inevitable. We’re now likely entering a period of market consolidation. Businesses that haven't built sufficient scale or don't have solid balance sheets won’t be able to survive without raising more funds. That gives bigger players with healthy business models opportunities to acquire and consolidate their market share.
This article originally appeared in Insider Intelligence’s Banking Innovation Briefing—a daily recap of top stories reshaping the banking industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.