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VCs Back Off Fintech Funding in Wake of COVID-19

May 14, 2020, 09:05 AM
Filed Under: Fintech
Related: COVID-19, Fintech

The Covid-19 pandemic has rattled both public and private markets globally. VC-backed fintech startups are no exception, according to a new report from CB Insights. Across the board, fintech funding activity stalled in Q1’20 as the coronavirus outbreaks forced investors to pull back investments.

In Q1’20, VC-backed fintech funding dropped to $6.1B across 404 deals. The Covid-19 outbreak had a significant impact on fintech financing resulting in the worst Q1 since 2016 for fintech deals and the worst Q1 for funding since 2017.

With forecasts of a recession, investors pulled back on early-stage bets to focus on fortifying portfolios. Q1’20 early-stage (seed & Series A) fintech startups saw 228 deals, a 13-quarter low, and $1.1B in funding, a 9-quarter low.

Fintech funding in Asia, North America, Australia, South America, and Africa dropped quarter-over-quarter. In Q1’20, Asia saw a 69% drop in funding (to $883M) and a 23% drop in deals quarter-over-quarter. Europe was the only major region to see an increase in funding, driven by 4 mega-rounds ($100M+) including Revolut’s $500M Series D and Qonto’s $115M Series C.

Investors start to see some liquidity amid a fintech M&A spree in 2020. In addition to the Plaid and Credit Karma acquisitions, fintech unicorn SoFi acquired Galileo for $1.2B and exited unicorn LendingClub acquired Radius Bank for $185M, pending close.

Click here to read the report in its entirety.

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