Image: © memorystockphoto/Stock.adobe.com
The report claims various issues such as conflicts, high interest rates and a ‘barren exit environment’ saw fintech investors hold onto their cash last year.
Ireland’s fintech sector took a significant hit from the macroeconomic issues affecting the globe last year, according to a new report from KPMG.
The report claims that Irish fintech companies attracted nearly $61m in investment last year, a massive drop of 94pc compared to more than $1bn in investment in 2022. Last year saw 11 fintech deals completed, compared to 22 the year before.
KPMG said the decline was also shown in global trends, as total investment hit a six-year low of $113.7bn across 4,547 deals last year.
The report cited macroeconomic issues for the decline worldwide and in the EMEA region, as conflicts in Ukraine and the Middle East, a high-interest rate environment and a “barren exit environment” saw investors hold onto their cash.
Ireland’s drop in funding was the most apparent in the second half of 2023, as the fintech sector attracted only $1.61m across two deals – compared to $742m in the same period in 2022.
The country’s fintech investment was also led by one major deal last year – the $53m raised by unified payments company NomuPay.
Anna Scally, KPMG’s head of technology and media, said the first half of 2024 is likely to “start in a very subdued fashion”, but claimed downward movement in interest rates could “spur some renewal of deals activity”.
“Given the level of uncertainty in the market in 2023, it was no surprise to see fintech investment back off substantially from the levels seen over the last two years,” Scally said.
“The exit environment will also be critical to watch as the extended lack of exits has made investors hesitant to make large deals globally. Investors remain cautious and will be looking to invest in companies that can demonstrate a clear path to high revenue.”
Meanwhile, a recent report from TechIreland revealed that a record number of start-ups founded by women managed to raise funding last year, but the overall level of funding dropped significantly.
Find out how emerging tech trends are transforming tomorrow with our new podcast, Future Human: The Series. Listen now on Spotify, on Apple or wherever you get your podcasts.
