Fintech and Crypto Top Q2 Start-up Funding Despite Sluggish Market Demand

These months, crypto companies​ and fintechs​ face an unprecedented wave of layoffs​, which were caused by a variety of reasons, including public-market turmoil, record inflation and rising concerns about an economic recession. Does this mean these industries have headed for a bearish market? In this article, we will take a look at which startup sectors are the bulls by the funding data in Q2 2022.

30+ Startups Raise over $100 Million in Q2

As previously reported by Fazzaco, there are over 200 startups that raised funding from April 2022 through June 2022 and 32 startups have raised more than $100 million, as shown in the chart below.

Among these companies, Klarna raised the most. On July 11 2022, the global leader in the generational shift away from credit cards, closed a $800 million funding round at a $6.7 billion post-money valuation​. Though the company announced to lay off about 10% of its 7,000 employees in late May 2022, claiming it was a result of the rampant inflation and the war in Ukraine.

Klarna was backed by its existing investors including Sequoia, the founders, Bestseller, Silver Lake, and Commonwealth Bank of Australia in the new financing round.

Klarna is followed by Liquidity, a credit-oriented fintech platform that received $775 million worth of capital commitments​ led by asset manager Apollo Funds and MUFG Bank in April.

The next one is Felix Capital, a London-based VC company, has raised $600 million in its fourth fundraising round​. The company, which has been investing in commerce and money-tooling startups, is planning to use part of the funds to increase its Web3 exposure as part of its new business strategy.

Fintech and Cryto Companies Attracted Most Funds

The 36 companies listed above include 12 cryptocurrency companies, 11 fintech companies, 5 payment companies and 4 companies of other types.

Of the total $7647.5 million these companies attracted in this quarter, cryto businesses raised the most funding ($2465 million), representing 32% of all funding. Fintech businesses and payment companies hold the second and third spot with $2236 million and $1710 million, representing 29% and 23% of all funding respectively.

The data shows that although crypto companies and fintechs are currently experiencing what many observers call their“winter”, some remain bullish on the markets.

Could Crypto and Fintech Winter Be Over?

According to Techcrunch, 4,189 fintech employees were let go across 45 events in the first half of 2022; this number is out of 46,740 startup employees laid off overall, making up 11.2% of the total. That compares to 8,375 in the first half of 2020 at the onset of the COVID-19 pandemic.

In late June, the digital banking technology provider Amount, which provides retail banking and point-of-sale technology to clients including Banco Popular, HSBC, Regions Bank and TD Bank, announced to trim its workforce by 18%.​

For crypto industry, we are seeing a wave of layoffs starting from the heavy news at Coinbase, which announced to plan to lay off 18% of its staff in June. Lately, the leading cryto exchange Gemini has made another round of layoffs​, affecting seven per cent of its staff, the move comes just weeks after the company’s founders Cameron and Tyler Winklevoss announced a 10% reduction in the workforce.

While conditions are challenging for most of the players in the markets, some experts still believe that it is just a consolidation after massive growth and the markets will pick up in the medium term.

Fintech and Cryto are both young industries and bound to experience some hiccups along the way. But how long will the winter last? Will the markets rebound in 2022? Capital always represents market sentiment. These sectors are still favored by investors, and it is only a matter of time before a recovery.