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European and Candian fintechs buck trend of global funding decline in Q1 2022

Europe and Canada started the year strong amid funding drops across the board, from banking to insurtech, early-stage deals to mega-rounds.

a person holding a pen and a paper with money on it

Starling Bank/Lensi photography.

The first quarter of the year has kicked off slowly for fintechs as funding fell 18 per cent quarter on quarter to $28.8bn, despite deals reaching a record high, according to CBInsights data.

While this decline was the largest percentage drop in quarterly funding since 2018, it was still the fourth-strongest quarter for funding on record, and a few geographic areas have still managed to thrive.

Europe and Canada led the way with increases in quarterly funding despite general funding falling almost uniformly across the board, including in wealth tech, banking, payments and inusrtech.

With the fifth-highest level of funding, Canada saw the biggest quarter on quarter increase as its funding increased by a huge 80 per cent, bringing it to $615m with a record 39 deals.

The biggest upset to the trend, however, comes from Europe, where funding rose by 39 per cent to $7.9m despite a slight dip in deals, bringing it closer to rivalling Asia, which still remains second to the US.

In Asia, funding fell steeply by 44 per cent to $4.8bn, despite deals hitting a record high of 388.

The US saw a similar trend as deals rose by 10 per cent to 489 while funding still dropped by 27 per cent to $13.3bn.

Latin America and Africa also saw deals rise as funding fell.

This trend might be explained by a drop in mega-round funding this quarter.

The number of $100m or more rounds continued to fall this quarter to 75 deals totalling $16.3bn.

Fintech mega-rounds also accounted for a smaller percentage of total deals and funding compared to each quarter in 2021, at 5 per cent and 7 per cent respectively.

The top funding rounds this quarter went to, Flexport and Cross River Bank.

Banking funding also saw a four-quarter low as its decline continued, sinking to $4.4bn and dropping by almost 50 per cent since Q2 2021.

Insurtech saw the biggest drop as funding declined by 58 per cent, despite deals remaining the same at 143.

This was the field’s lowest funding level since Q2 2020.

Payments and wealth tech funding also dropped, while capital markets tech saw a 16 per cent increase, the only one across all funding.

Equalling the last quarter, 34 new unicorns have entered the scene, with half of them coming from the US.

These include Binance.Us, Cross River Bank and Capitolis and bring the US total to 138.

Following closely behind the US and outpacing Asia in its total number for the first time, Europe has 11 new fintech unicorns, bringing it to a grand total of 54.

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