I was worried about fintech a few months ago.
To some extent, I still am. After all, there’s a lot to worry about, from interest rate-induced pressures, to the prospect of increased scrutiny on the space. However, I’ve been feeling a bit more optimistic lately: There’s been a string of high-profile fintech funding rounds announced over the last few months, from Ramp’s $150 million Series D-2 (which bumped the company’s valuation to $7.65 billion) to Altruist's $169 million Series E. A number of notable earlier-stage companies, like Savvy Wealth, have been getting funded, too.
Of course, that doesn’t mean the picture is looking better across the board. For example, just this week, we saw the shutdown of consumer-facing Tally. And worldwide tech investment (including private equity, VC, and M&A) dropped to $51.9 billion in the first half of this year, down from the $62.3 billion we saw in the second half of 2023, according to recently released data from KPMG. The first half of this year saw 2,255 deals, a slight decline from the latter half of last year’s 2,287 deals.
In the first half of this year, every noteworthy region saw overall fintech investment on the decline. In the Americas, fintech investment went from $38.5 billion in the second half of last year to $36 billion in the first half of this year. Private equity has especially been backing away—at the midyear mark in 2023, total PE fintech investment was $9.6 billion. This year, that number is $979 million. (Stripe's $6.5 billion Series I in 2023 accounts heavily for this disparity.)
However, fintech M&A, perhaps as a result of the challenging funding and IPO environment, is pacing ahead of 2023. Last year, aggregate fintech deal value came in at $58.8 billion—and in 2024 that number is already at $32.6 billion. For fintech startups seeking an exit, and for acquirers looking for a bargain, striking a deal has obvious appeal.
I talked to Tom Callahan, Nasdaq Private Market CEO, about my fintech feelings. He says he thinks about fintech as “very story-by-story” right now—and that this all is far bigger than fintech anyway.
“I don’t think you should be worried about fintech any more than you should be worried about any other sector of the private markets,” said Callahan. “For private companies, there’s a conveyor belt, and that conveyor belt is kind of broken right now…And while things have improved from 2023, it’s still incredibly challenging. It’s a bit like a game of musical chairs—there are too many private companies, and too little capital out there for all of them.”
Add this all up, and the fintech sector ultimately looks just as entangled in mixed signals as the wider world of VCs and startups. There are high-profile success stories like Ramp and Altruist making headlines, despite the difficulties weighing on their fintech peers.
So perhaps feeling overly sanguine or pessimistic isn’t the right way to think about what's going on in fintech right now. I think my spirits have been buoyed by talking to investors who believe that the worst has passed, and I’ve been watching as numerous great fintech funding rounds pass through my inbox.
So, it’s more a matter of shifted perspective than objective reality, but I’m not especially worried about fintech. At least, not today.
Elsewhere…My colleague Jason Del Rey has the exclusive this morning on Photon Health, a startup that’s looking to make waves in a space where many have drowned: the labyrinthine prescription drug market. The company recently raised a $9 million round, as it pursues a lofty goal—to make shopping for prescription drugs transparent and convenient, much in the way online shopping is today.
See you tomorrow,
Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
Submit a deal for the Term Sheet newsletter here.
Nina Ajemian curated the deals section of today’s newsletter.
