Investment in fintech startups in the US and UK saw significant declines in 2023, driven by inflation, rising interest rates, geopolitical challenges, and other macroeconomic factors that impacted valuations and deal activity.
The US fintech startup ecosystem remains the most funded globally, yet it experienced a 36% decrease in funding this year, totaling $18.2 billion compared to $56.3 billion in 2022, as reported by Indian analyst firm Tracxn. The UK, on the other hand, faced a more severe downturn, raising only $4.3 billion in 2023—a 68% drop from the previous year’s $11.2 billion.
Late-stage funding in the US was relatively less affected, declining by 18%, whereas the UK saw a more drastic 60% reduction in this area. Only four new Unicorns emerged in the US fintech sector in 2023, a stark contrast to the 29 that were created in 2022. Kin, SageSure, Lendbuzz, and Vestwell achieved valuations exceeding $1 billion after each securing at least $200 million this year.
Acquisition activity also declined in both markets. The number of acquisitions in the US fell to 172 in 2023, down from 247 in 2022 and 319 in 2021. The UK saw a slight decrease as well, with 66 acquisitions last year compared to 70 in 2022 and 95 in 2021.