Fintech funding hit a four-year low globally in the first half of 2024, but nearly three-quarters of the money raised went to North America, followed by Europe. 

North America firms raised 69% of the $51.9 billion in H1 global funding, followed by the Europe Middle East and Africa (EMEA) region, which got 21%, according to the KPMG Pulse of Fintech Funding H1 report, published on Aug 21.

However, North America’s total funding dropped 6.4% year over year to $36 billion in H1; meanwhile EMEA region funding dropped 40% YoY to $11.4 billion, according to the report. 

With money drying up, venture capitalists are being cautious about their investments, Asaf Charnilas, principal investor at Tel Aviv-based VC firm Team8, told Bank Automation News. 

“We are looking at companies that are solving really big problems in very large markets where we can see a very clear business case as to why that solution would gain traction,” Charnilas said. “We look at founders that have deep subject expertise to solve a problem.” 

Given that Team8 invests in companies in early seed or seed-funding rounds, there are few numbers to evaluate and more projections to look at, he said, adding that while quarterly fluctuations are noted, they are not a matter of high concern for Team8. 

“We’re looking at companies that we think have the potential to grow very large,” Charnilas said, adding that Team8 takes a long-term horizon with its investments. 

Team8, he said, is currently evaluating the following segments for investment: 

• Know your customer and anti-money laundering solutions; 

• Compliance service providers; and 

• Personal finance management tools. 

Fintech valuations 

As VCs hunt down innovative startups, their existing investments have taken a hit on their valuations. 

A high-rate environment and low liquidity in the market has adversely affected many fintechs’ valuations, according to the KPMG report. 

“We can all agree that valuations were overhyped and there was a crash across all verticals, fintech saw more of a crash in valuations,” Charnilas said, adding that the correction of valuation is a positive for the market in the long run. 

In one example, automated debt management service provider Tally closed its operations Aug. 13 after raising $172 million from investors, including a16 and Silicon Valley Bank, due to liquidity and profitability concerns, according to Crunchbase. 

August North American deals 

Despite market turmoil, some fintechs successfully raised funds in the past month: 

• Chicago-based loan origination service provider Amount raised $30 million on Aug. 15 to expand its AI-driven underwriting and origination capabilities, according to a company release.“Amount will use the funds to further enhance our AI capabilities, expand our product offerings within consumer and small business lending, and to accelerate our growth within the credit union space,” Chief Executive Officer, Adam Hughes, told BAN.As economic conditions become more challenging, there is a growing demand for advanced loan origination systems (LOS) that can better serve banks and credit unions, Hughes said, adding that the company onboarded Liberty Bank and a credit union association Velera (formerly PSCU), which has over 1,000 credit unions as it members to its platform in 2024.

Fifth Third Bank, Citizens Bank and Bank of the West are some of Amount’s customers, according to the company.

• Credit card rewards provider Bilt Rewards has raised $150 million from Teachers’ Venture Growth and Ontario Teachers’ Pension Plan at a valuation of $3.1 billion, according to the company’s Aug. 2 release. The company boasts investors, including Wells Fargo and General Catalyst and has raised $563 million since its inception in 2021, according to Crunchbase.  

• Online powersports vehicle lender Octane raised $50 million in series E round, according to an Aug. 6 release. The money will be used for expansion and to improve digital capabilities, the release stated. Since its inception in 2017, the New York-based Octane has raised $2.3 billion from VCs, including Valar Ventures and Progressive Insurance. 

August global deals 

• Global payroll and payment solutions provider CloudPay raised $120 million from Blue Owl Capital and Rho Capital Partners, according to its Aug. 8 release. The money will be used to expand globally, the U.K.-based company said. CloudPay has raised $375 million since its inception in 1996, according to Crunchbase.

• London-based pension fintech Jarvis has secured $2.3 million in seed funding from Ascension VC and Cornerstone VC, according to the company’s July 24 release. The funds will be used for expanding pension services to gig economy workers, build relationships with financial institutions and improving digital offerings, the release stated. 

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