Last year's Fintech apocalypse

Fintech funding in the US and UK experienced a significant decline in 2023 as per a new report

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Investment in U.S. and U.K. fintech startups took a steep dive in 2023 due to factors like inflation, rising interest rates, geopolitical tensions, and broader macroeconomic conditions impacting both valuations and deal activities as per a recent report from Tracxn.

The U.S. led as the most heavily funded fintech ecosystem globally in 2023. Despite this, funding for the sector nosedived by 36% to $18.2 billion, a stark contrast to the $56.3 billion raised in 2022.

The downturn was even more pronounced in the U.K., where funding plummeted to just $4.3 billion in 2023, marking a substantial 68% drop from the previous year's $11.2 billion.

Although late-stage funding in the U.S. experienced a comparatively modest decline of 18%, the U.K. faced a sharper plunge of 60%.

In 2023, only four new “Unicorns” emerged within the US fintech landscape, significantly lower than the 29 created in the preceding year. Kin, SageSure, Lendbuzz, and Vestwell achieved a valuation exceeding $1 billion each after securing at least $200 million in funding during 2023.

Both the U.S. and the U.K. witnessed a decline in acquisitions. The number of acquisitions in the U.S. market dwindled to 172 in 2023 from 247 in 2022 and 319 in 2021. Likewise, the U.K. experienced a slight downturn, with 66 acquisitions last year, down from 70 in 2022 and 95 in 2021.