The sharp drop-off highlights the rapidly shifting marekt
Australian fintech investment deal volume fell to 123 transactions in 2022, from a historical high of 187 transactions in 2021, according to the Pulse of Fintech H2’22 – a bi-annual report published by KPMG highlighting global fintech investment trends. While a record $US30.2 billion of investment was tracked for the year, $US27.9 billion was due to the Afterpay acquisition by Block. Without this transaction, overall fintech investment would have fallen from $US3.01 billion in 2021 to $US2.2 billion in 2022.
After reaching a record $US238.9 billion across 7,321 deals in 2021, total global fintech investment across M&A, PE, and VC fell to $US164.1 billion across 6,006 deals in 2022. While results were substantially lower compared to 2021’s peak highs, 2022 was not a poor year. In fact, it was the third best year for fintech investment ever and the second strongest year for deal volume.
The sharp drop-off in fintech investment between H1’22 and H2’22—from $US119.2 billion to $US44.9 billion—highlights the rapidly shifting market conditions much more clearly. In particular, H1’22 saw numerous $US1 billion+ deals, including eight M&A transactions —the acquisition of Australia-based Afterpay by Block, two VC raises—Germany-based Trade Republic and UK-based Checkout.com, and one PE deal—US-based Genesis Digital Assets.
“2022 saw a repricing in the overall venture capital market, which affected fintechs both globally and in Australia,” said KPMG Australia Head of Fintech, Dan Teper. “The market continues to correct to previous years following a bumper 2021, and for Australian fintechs this has resulted in fundraising taking longer – often on flat or discounted valuations, while business models have shifted to be more focused on sustainable, rather than top line growth. Within the ecosystem, crypto’s extreme volatility has resulted in investment in associated assets and businesses to be challenging. However, we have also seen ongoing interest in areas like regtech and payments, and continued appetite amongst incumbent financial services players for the innovation opportunities that fintech startups bring.”
