Americas attracts $39.4 billion in fintech investment in H1’22, down from $59.7 billion in H2’21

Despite a dip in quarterly investment to $22.7 billion, the Americas saw a record 806 deals in Q1’22, highlighting the strength of the fintech market in the region at the start of 2022. As geopolitical uncertainty and macroeconomic challenges increased towards the middle to end of the quarter, fintech investors pulled back somewhat. Total investment dropped to $16.8 billion across 624 deals in Q2’22, bringing the investment total to $39.4 billion across 1,430 deals for the first half of the year.

The US accounted for the largest deals in the Americas during H1’22, including the $2.6 billion buyout of Bottomline Technologies by PE firm Thomas Bravo, the $1.2 billion buyout of SimpleNexus by nCino, the $1.1 billion acquisition of Technisys by SoFi, and the $748 million VC raise by Ramp. Key H1’22 highlights from the Americas include: 

Americas fintech investment activity

US attracts vast majority of fintech investment in Americas

The US accounted for $34.9 billion of fintech investment in the Americas during H1’22, a drop from $49.7 billion in H2’22. Fintech investment outside of the US dropped even more prodigiously in the wake of the rapid rise in global geopolitical and macroeconomic uncertainty — with Brazil and Canada seeing declines in investment greater than 50 percent between H2’21 and H1’22. Brazil saw fintech investment drop from $3.7 billion to $1.4 billion, while Canada saw investment fall from $1.9 billion to $810 million.

Investors turning focus to profitability and cash flow

Given rising interest rates, increasing levels of inflation, and growing concerns about an economic recession, fintech investors across the Americas enhanced their focus on profitability, top-line revenue growth and cash flow when evaluating targets and companies within their portfolios. Investors have also started to consider the potential of companies to deliver returns given the changing market conditions.

Declining valuations in many fintech subsectors

Given macroeconomic conditions, many public companies have seen significant downward pressure on their valuations, including many previously frothy tech companies. While the private markets have not seen adjustments to the same degree as of yet, there could be a number of downrounds heading into H2’22 as fintechs look to raise capital given the downward pressure on valuations. 

Interest in challenger bank market remains quite strong

Within the Americas, challenger banks continued to attract attention — particularly in Latin America, where challenger banks are focusing on middle market consumers and small businesses — large populations seen as underserved historically. Interest in challenger banks is also growing in Canada, where the banking market has long been dominated by a small number of big banks.

Slowdown in funding, particularly in blockchain and crypto

After a record-breaking year of crypto ad blockchain investment in the Americas during 2021, investment in the space slowed during H1’22. While investment remained very strong compared to pre-2021 results, led by January raises by US-based Fireblocks ($550 million) and Bahamas-based FTX, H2’22 could present more challenges for companies in the sector.

Trends to watch for in H2’22

  • VC firms becoming more aggressive as fintechs look to raise additional capital.
  • Increasing interest from investors in M&A opportunities in the Americas as valuations come down.
  • Regulators focusing more heavily on the cryptocurrency space in order to protect consumers.
  • Continued absence of IPO activity — and the dissolution of some SPACs.
  • Investment in payments and cybersecurity showing some resilience.

VC and PE firms have raised a lot of money, especially in the later half of 2021, so funds are still very liquid. As valuations come down and stabilize and investors become more comfortable with what the outlook looks like, we may see deal activity pick up, but investors are going to want to provide funding at much different valuations than they did before. Many will also want to extract more ownership out of their investments than maybe they’ve been able to over the last year or two.

Robert Ruark
Principal, Financial Services Strategy and Fintech Lead
KPMG in the US

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Global fintech investments in H1 2022 recorded $107.8B with 2,980 deals

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