The Covid-19 outbreak has 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.
Across the board, fintech funding activity stalled in Q1’20 as the coronavirus outbreaks forced investors to pull back investments, according to data collated by research outlet CB Insights.
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 of $100M+, including Revolut’s $500M Series D and Qonto’s $115M Series C.
The firm says sentiment among investors if for a fintech M&A spree in 2020, as valuations decline and funding dries up. This is a trend that has been picked up by other research houses, with robo-advisors, marketplace lenders and challenger banks seen as among the most vulnerable sectors.