2024 report highlights Fintech founders
diligently improving bottom line in 2024 despite investments
dropping 91% since peak in 2021
SAN
FRANCISCO, Oct. 23, 2024 /PRNewswire/ --
While fintech companies face significant headwinds – from high
interest rates to increasing regulatory oversight – they are also
finding opportunity in 2024, according to the latest Future of
Fintech Report from Silicon Valley Bank (SVB), a division of First
Citizens Bank. Venture capital (VC) investment remains muted,
hovering near a six-year low for the sector, as deal flow has
shifted toward the early stage, with more than three seed deals for
every one series A. Artificial intelligence (AI) is also emerging
as a bright spot for the industry as investors and founders explore
its growing role in the sector.
The 2024 Future of Fintech Report provides a detailed analysis
of the fintech market, including investment and fundraising trends.
It also looks at the growing importance of AI in horizontal
applications, including customer service and productivity, as well
as vertical applications specific to finance.
"While fintech companies face challenges, we anticipate broader
recovery in investment to begin in 2025 as we continue to see
opportunities for the industry," stated Nick Christian, Head of National Fintech and
Specialty Finance at Silicon Valley Bank. "For example, US fintech
companies are becoming more efficient with nearly 80% of fintech
companies improving EBITDA margins year-over-year and nearly 30%
now having six to 12 months of runway left, up from 20% last year.
At the same time, generative AI is opening possibilities for value
creation in fintech - whether it's legacy companies improving
efficiencies by reducing labor costs, or AI-native companies
building novel solutions."
Additional findings from the Future of Fintech 2024
report include:
Fintech Investment Key Data Points
- Fintech-inclined VC fundraising dropped 91% since its peak in
2021, with funds raising $5B through
September. Announced funds, including those that have not yet
closed, totaled $9B, the lowest since
2020.
- One in twelve VC dollars went to a fintech company in 2024,
down from one in five dollars in
2021.
- VC firms have slowed their pace of deployments in fintech. In
2021, the most active 100 US fintech investors were closing more
than two deals per month. That pace has dropped to less than one
deal per month this year.
- In 2021, fintech deals over $100M
accounted for 65% of deal activity in the sector. In 2024 this
number has dropped to 34%.
AI Investment by the Numbers
- Since 2021, mentions of AI in fintech corporate earnings calls
have increased 4x.
- AI-native fintech companies are experiencing an advantage in
incorporating AI tools into early stage products while legacy
fintechs are largely cutting human capital costs in order to
embrace AI.
- Native AI companies in fintech create more value per dollar
invested than Legacy/first-generation fintechs (i.e., median for
2024 VC deals was 4.0x for Native AI versus 2.7x for Legacy/First
Generation AI).
Learn More
To read the complete Future of Fintech 2024
report, click here: The Future of Fintech Report 2024 | Silicon
Valley Bank (svb.com)
A leader in providing market insights about the innovation
economy, SVB has produced more than 10 new market reports in 2024.
For the complete library of SVB's signature reports, please visit
Market Research Industry Trends & Insights | Silicon Valley
Bank (svb.com)
About Silicon Valley Bank
Silicon Valley Bank (SVB), a division of First Citizens Bank, is
the bank of some of the world's most innovative companies and
investors. SVB provides commercial and private banking to
individuals and companies in the technology, life science and
healthcare, private equity, venture capital and premium wine
industries. SVB operates in centers of innovation throughout
the United States, serving the
unique needs of its dynamic clients with deep sector expertise,
insights and connections. SVB's parent company, First Citizens
BancShares, Inc. (NASDAQ: FCNCA), is a top 20 U.S. financial
institution with more than $200
billion in assets. First Citizens Bank, Member FDIC. Learn
more at svb.com.
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SOURCE Silicon Valley Bank
