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FUNDRAISING NEWS | October 23, 2024

VC Interest in FinTech Remains Tepid but AI a Bright Spot, SVB Reports

Tags: Technology, Private Equity, Venture Capital

Silicon Valley Bank's latest "Future of Fintech" report reveals a cautious outlook for venture capital investments in the fintech sector, which remain subdued as the industry grapples with persistent economic challenges. 

Venture funding in fintech has plummeted by 91% since its peak in 2021, with investment activity hovering near a six-year low, according to SVB. This trend is characterized by a shift towards early stage deals, with over three seed transactions for every one Series A round.

While funding remains subdued, the report identifies the integration of artificial intelligence (AI) as a potential bright spot for the industry. A significant increase in mentions of AI during corporate earnings calls – quadrupling since 2021 – illustrates fintech companies’ growing focus on leveraging AI to enhance operational efficiencies and develop innovative solutions.

The report emphasizes that while venture capital interest in fintech remains muted, nearly 80% of fintech companies have improved their EBITDA margins year on year, and 30% have six to 12 months of runway, a 20% increase from last year. The sector's adaptability and focus on technological advancements may pave the way for recovery and growth in the coming years, SVB concludes. 

Access the full report here. 

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Written By: Dakota

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