The London Stock Exchange Group has thrown its weight behind a new review of the fintech funding landscape today as venture cash dries up and valuations plunge in the face of a looming recession.
The new Review into Fintech Funding , launched by industry group Fintech Week London (FTWL) today, will look to bring together regulators, investors and finance firms to address the rapid deterioration of the venture capital landscape for fintech.
FTWL said it had already received the backing of the London Stock Exchange for the new review and was now looking for input from across the industry as it kicks off Fintech Week London today.
Boss Raf de Kimpe told City A.M. that the sharp plunge in valuations and funding would dominate much of the conversation throughout the week.
“Now more than ever, especially post pandemic and with what’s happening in the economy, it’s important for people to find the right partnerships and the right collaborations and even learn from each other on how to tackle this,” he told City A.M.
“We’re going to look at what has happened to funding, how can we learn from this and how we can work together to make sure that industry gets better than before.”
The review comes as central banks across the world hike interest rates and put an end to the cheap money that has fuelled an investment frenzy for the past decade.
Global venture capital continued its slowdown in the second quarter of the year with funding plunging nearly 23 per cent on the first quarter of the year.
Around $108.5bn was raised across 7,651 deals last quarter — marking the biggest quarterly percentage drop in deals and the second-largest drop in funding in a decade, according to data from analytics firm CB Insights.
Fintech firms have also been slashing headcounts and tapering back growth plans as they look to fast track their route to profitability, with some of the industry’s most prominent names hit by heavy slides in valuations.
Buy-now pay-later giant Klarna, previously Europe’s most valuable fintech at $46bn last year, is now reportedly valued at just $6.5bn after its latest funding round. The firm also announced it was slashing its workforce by ten per cent in recent weeks to cope with the tech downturn, and would shift its investments to focus on profitability.
UK banking app Curve was among those to announce layoffs this year, slashing 60-70 jobs, while US giant Robinhood recently cut nine per cent of its staff and crypto bourse Coinbase is laying off 18 per cent of its workforce.