Fintech funding dwindles amidst Coronavirus pandemic
Fintech funding reduced at the beginning of 2020 because the COVID-19 outbreak began to hit late on, as a Forrester report warns that a lot of firms are more likely to bite the dust because the crisis has just begun.
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Global fintech funding during the primary quarter was $5.78 billion, down from $7.77 billion within the fourth quarter of last year and $12.59 billion in Q3 2019.
Forrester notes that funding was already in decline by the end of last year, but the COVID-19 crisis is already taking a toll. The economic shock from the virus took hold globally by early March, which sank hopes for several companies. 24 companies closed down in March as compared to 25 in February, which made the investors less generous.
The biggest round of the quarter was $500 million for an England-based digital bank Revolut, but in March the greatest amount of funding was $100 million for a Mexican money lender, Credijusto. China was the primary region to shut down, and no Chinese fintech closed down due to a gentle stream of funding there for the past few years.
Investors are generally getting more cautious, gathering to late-stage firms in well established, or maybe crowded, sectors. And, because the fallout from the pandemic continues, it is predicted that a lot of fintech companies will close down or be bought by the existing ones.
The report states: “The last two economic downturns saw an enormous reduction privately financing. this point won’t vary. Only fintech companies that had market traction were profitable, or had secured an enormous funding round before COVID-19 struck will survive the upcoming consolidation.”