KUALA LUMPUR (July 29): Global funding to private companies in financial services — a leading sector for investment — has slowed significantly in the past five quarters.

In a report last Friday (July 26), Crunchbase, which tracks trends, investments and news of global companies from startups to the Fortune 1000, said that in the second quarter of 2024 (2Q2024), financial services companies raised US$9.7 billion (RM45.01 billion), up a bit from the US$8.3 billion invested in the sector in the same quarter in 2023 and up 17% quarter over quarter.

However, it said funding for the past quarter was down 75% from the market peak of 2Q2021, when more than US$40 billion was invested.

The firm said that over the past five quarters, funding to financial services companies trailed below US$10 billion each quarter, based on Crunchbase data.

These five quarters show the lowest funding amounts to the sector since 1Q2017, which saw US$9.3 billion in funding.

Crunchbase said while every sector was down from the funding heights of 2021, financial services have shown a greater decline since the slowdown.

It said that by comparison, overall global funding this past quarter was down 59% from the peak quarter in 2021.

Crunchbase said financial services is the leading sector for unicorns, with over 390 companies on The Crunchbase Unicorn Board.

It said these include Ant Group from China, as well as payments company Stripe, and neobanks Revolut and Chime.

Those last three fintech companies could look to list in the coming year.

Crunchbase said despite the slower funding environment, there are a number of fintechs that missed the IPO window in 2021 and have spent the last two years refactoring their businesses.

The firm said Stripe claimed it processed US$1 trillion in payments in 2023, and Revolut’s 2023 revenue grew 95% year over year to US$2.2 billion, with an increase of 12 million new customers.