Quarterly Fintech Market Update | Q3 2022

MUNICH | NEW YORK | PARIS | November 21st, 2022 – Drake Star's FinTech team is delighted to publish its Q3 2022 FinTech Market Update, providing key insights into market trends, fundraising, and M&A activity in the FinTech sector. Furthermore we provide extensive information on six key FinTech sub-verticals, which include Payments, InsurTech, WealthTech, Core Banking & Lending Solutions, Financial Data, and Blockchain & Crypto.

“Both, M&A activity and fundraising, further slowed in Q3 2022, with M&A activity down 70% YoY and funding volumes down 50% YoY,” said Julian Ostertag, Managing Partner & Member of ExCom at Drake Star. “Investment money is harder to come by, however, investors and buyers are still ready to pay premium valuations for the right assets.”

Due to difficult and volatile macroeconomic environment, public FinTech company valuations have plummeted since Q3 2021. However, a moderate recovery can be observed especially in the payment and B2B WealthTech segments.

The number of M&A deals has decreased since Q4 2021 from 274 to 156 in Q3 2022, representing a 43% decrease. Aggregate M&A deal value is down 84% across the same period. However, Q3 2022 still recorded a handful of notable fintech M&A deals including:

• Thomson Reuters acquired PLX AI, an AI financial news feed platform designed to extract and deliver news that moves stocks
• Goldman Sachs acquired NextCapital, operator of a digital advice platform intended to deliver personal, objective, and portfolio services to investors
• J.P. Morgan acquired Global Shares to bolster services offered to corporate clients and to create a new client acquisition channel for its wealth management businesses

“Despite financing still volume dropping to its lowest since 2020, many FinTech verticals remain very attractive,” said Sam Levy, Partner at Drake Star. “Climate FinTech funding is soaring with almost $1.8bn raised in H1 2022 (compared to $1.2bn in 2021) and spend management software and IDTech continue to experience increased interest as well with fundraisings reaching over $100m in 2022.”

Aggregate deal value decreased for fundraisings from $36.2bn in Q4 2021 to $5.1bn in Q3 2022. Key transactions include:

• Alloy completed a $152m Series C funding led by Avenir Growth and Lightspeed
• SumUp completed a $602m Series C funding led by Bain Capital Tech Opportunities
• Klarna completed an $800m late-stage funding led by Best Seller, Silver Lake, and Sequoia

The FinTech IPO market remains frozen, with only one IPO (AMTD Digital) this year compared to 41 in 2021. The amount raised through IPOs in 2022 is the lowest over the past 10 years.

Drake Star's FinTech Team: Julian Ostertag, Christophe Morvan, Sam Levy, Ron Rivera.