Amidst a backdrop of overall venture capital growth, the fintech sector experienced a downturn in Q1 2024, with funding dropping by 16% compared to the previous quarter. This decline marks the lowest level of funding for fintech ventures in seven years, reminiscent of the market conditions observed in 2017.
CB Insights’ quarterly venture capital report for Q1 2024 highlighted a mixed picture for the venture market. While there was a net gain of 11% in venture funding compared to the previous quarter, concerns lingered due to eight consecutive quarters of decline in equity deals. Nonetheless, the market saw some significant deals, including Amazon’s noteworthy $4 billion investment in Anthropic AI.
Venture funding in Q1 2024 reached $58.4 billion, showing a potential rebound from the previous quarter. However, despite this positive sign, the overall market remains down by 21% compared to the same period in 2023 and a staggering 62% compared to Q1 2022. Additionally, the number of new unicorns created saw a decline of approximately 17% compared to the previous quarter.
In the United States, the decline in fintech funding coincided with increased regulatory scrutiny by the Federal Deposit Insurance Corporation (FDIC) regarding banking relationships with fintech companies. This regulatory environment may have contributed to the cautious approach investors are taking towards fintech ventures.
Conversely, the cryptocurrency market experienced unprecedented highs in Q1 2024, with Bitcoin reaching $69,421 and the overall cryptocurrency market cap hitting a record high of $2.9 trillion. However, the market cap slightly decreased to $2.71 trillion in Q2. The surge in the crypto market occurred just before the anticipated Bitcoin halving, with analysts forecasting significant price movements, although opinions on the event remain divided. Some anticipate a substantial price increase, while others view it as a “sell the news” event.
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