PitchBook News - Where does fintech go from here?

Also: Global M&A had a rough 2023 but the worst may be behind us; Biologicals bring nature back to agriculture; AI stands out at retail conference...
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The Research Pitch
January 27, 2024
Presented by the U.S. National Science Foundation
All about agtech: VC funding in agtech ended 2023 on a sour note, but longer-term growth drivers remain. Our new report dives into the latest data and explores the potential of digital twins in modern agriculture. Read a preview.

Performance and financials: Shares in public medtech companies rebounded in Q4, while most segments of the public healthcare services sector have struggled. For data on valuations, revenue forecasts, and more, download our new comp sheets for medtech and healthcare services.

Talking PE: When will private equity returns bounce back? On Wednesday, our US PE team will examine the trends that defined the market in 2023 and share what to expect in the year ahead. Register here for the free event.
 
A message from the U.S. National Science Foundation  
Invention to impact
Folia Water develops and manufactures paper water filter products designed to reduce waterborne pathogens. The technology helps customers drink purified water at a low cost. Folia Water (1951210) is one of the hundreds of deep tech startups funded annually by the U.S. National Science Foundation (NSF), a government agency that plays a central role in accelerating discoveries into the marketplace.

Each startup can receive up to $2 million to support translational research & development. By investing more than $200 million in startups annually, NSF helps teams navigate the earliest stages of technology translation. These companies have gone on to raise billions in follow-on capital, and the portfolio has had 300+ exits.

Learn more about NSF funding at seedfund.nsf.gov
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Fintech's inflection point: Where does the industry go from here?
So much has happened in fintech within the past year.

History has shown us that the market is often quick to forget. It wasn't long ago when Silicon Valley Bank kicked off a crisis for regional banks. Or when Stripe raised a $6.9 billion down round to avoid an untimely IPO.

If we go back even further, events like the COVID-19 pandemic feel like a distant memory. But the pandemic ultimately revolutionized the fintech industry, and new innovations today are still being built because of it.

Today's market is fixated on elevated interest rates, lower funding levels, normalizing valuations, and heightened regulatory scrutiny. While it's important to be cognizant of these elements, we shouldn't forget about the opportunities ahead.
 


The fintech industry is at an inflection point.

There is so much negative noise, and yet there are so many positive signals.

Here's what I mean:

VC funding for fintech startups is at its lowest level in five years.

But there is an abundance of new opportunities, such as in generative AI, real-time transactions, alternative investments, open finance, and digital identity.

Valuations are continuing to mean revert.

But companies like Klarna, Monzo, Nubank, and Wise are profitable and still growing.

Exit levels remain lackluster.

But some notable acquisitions occurred in Q4, and companies like Stripe, Klarna, Plaid, Pleo, and Apex Fintech Solutions have signaled preparations for IPOs.

I believe this year will be a critical year for fintech. However, predicting where the industry is headed in 2024 will be a challenging feat.

Our new fintech research lays out all the key developments for the sector and can help provide clarity on what to expect for this year.

Within the report, you will find:
  • Full-year data on funding, exits, deals, and valuations for 2023
  • Subsector breakdowns
  • Analysis of emerging industry trends
  • Commentary for M&A and IPOs
  • Summaries on key regulatory developments
Download the free report: Fintech: State of the Industry
 
Best,

Rudy Yang
Senior Analyst, Emerging Technology
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Market Updates  
 
Worldwide M&A deal value reached $3 trillion in 2023, marking it the second-weakest year in a decade. But the worst may be behind us, according to our 2023 Annual Global M&A Report.

Estimated M&A deal count was 40,298—the third-highest total on record.

Additionally, the Federal Reserve's pivot to interest-rate cuts raises optimism for a recovery in the deal market.

Lastly, public multiples have sprinted ahead of private multiples, setting the stage for a catch-up move:
read the free report
 
 
Thematic Research  

Biologicals Bring Nature Back to Agriculture

Agricultural biologicals are in high demand, and VCs are taking note.

These sustainable products are designed to enhance crop productivity, optimize soil health, and reduce reliance on traditional chemicals.
 

Our note unpacks the market for agricultural biologicals, a sector that raised nearly $1 billion of VC in 2023:
read the free research
 

Takeaways From NRF 2024

At the National Retail Federation conference, retailers were cautiously optimistic given strong economic signals and rising e-commerce market share—tailwinds that should allow for further investment in retail technology in 2024.

AI was everywhere at the event, but some of the most potentially valuable applications face resistance from enterprises that are highly protective of proprietary data.

Our conference recap shares several key takeaways:
read the free research
 
 
Webinars & Events  

Don't miss these upcoming webinars!

Feb. 5-8: Our analysts will be participating in the BVCA's European Private Capital Conference series in Toronto, New York, and San Francisco. The events are for institutional investors only and offer an opportunity to network and gather insights on trends in the European market. More details here.

Feb. 6: Our tech analysts Derek Hernandez and James Ulan will sit down with founders from Y Combinator's newest crop of CRM startups to discuss how they're taking on incumbents, leveraging AI, and more. Register here.

Feb. 15: Dwindling cash runways coupled with a stagnant exit environment have created intense challenges for the US VC ecosystem. Our quarterly Venture Monitor webinar will feature key highlights from the report and discuss the trends investors need to be aware of. Register here.
 
 
In the News  

Our insights and data featured in the press:
  • Last year's PE-backed IPOs fell 74% below their annual average from 2011-2020. [WSJ Pro]

  • "Secondary markets have been around for a while. But we think that for a variety of factors it hits critical mass this year." [WealthManagement.com]

  • Why PE could rebound in 2024. [Inc.]

  • How the thinking behind biotech IPOs has changed in recent years. [BioPharma Dive]
If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.
 
 
ICYMI  

More of our recent research (* - report preview):

Market updates
Thematic research
Industry & tech research
Credit research
Coming next week (subject to change)
  • Information Security Report*
  • Carbon & Emissions Tech Report*
  • Global Markets Snapshot: January
  • The Blended Wing Body Aircraft Industry
 

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