As Covid-19 has destabilised private capital markets, the first quarter of 2020 was one of the worst quarters in 2 years for venture capital-backed fintech.
How bad was the hit?
During the period, VC-backed fintech activity dropped to $6.1 billion across 404 deals, the worst Q1 since 2016 for fintech deals.
What is investor strategy?
Investors pulled back on early-stage bets to focus on fortifying portfolios for a forecasted recession: Q1’20 early-stage (Seed & Series A) fintech startups saw 228 deals, a 13-quarter low, and $1.1B of funding, a 9-quarter low.
Who was the worst affected?
As the country shut down to fight Covid-19, Chinese fintechs were hit the hardest, resulting in its worst quarter since 2015. Overall, Asia saw a 69% drop in funding and a 23% drop in deals compared to Q4’19. For the first time in 5 quarters, India exceeded China’s funding activity, but the two countries tied in the number of deals.
How are fintech startups coping?
From insurtech and lending to payments and infrastructure, fintech and big tech players across every vertical are accelerating product development to prepare for the downstream impacts of the coronavirus and a recession.