Investment in Irish fintechs drops 70% in first half of year

Investment in the Irish fintech sector slid by over 70 per cent in the first half of the year to $259 million (€258.8 million), down to a drop in large individual deals that had driven last year’s record figures, according to a new report.

There was a $900 million total for the first six months of 2021. However, fintech investment in the State has averaged just over $277 million for the same period during the previous five years, according to data contained in the KPMG Pulse of Fintech report for the first half of 2022.

“While [the first half of 2022] saw numerous challenges that affect the broader investment market, fintech investment is expected to remain somewhat resilient,” said Anna Scally, partner and fintech lead at KPMG in Ireland. “However, deals could take longer to complete as investors become more critical of opportunities.”

Impending recession

Fintechs globally have put initial public offering (IPO) plans on hold over the past nine months amid a slump in equity markets, led by technology stocks, and have been cutting costs amid fears of an impending recession. The tech-rich Nasdaq index has slumped almost 28 per cent so far this year.

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Two deals drove Irish fintech investment levels earlier this year. These included Wayflyer, a company that provides financial and marketing tools to ecommerce merchants, raising $150 million in a funding round that gave it a value of $1.6 billion. The start-up, which was founded in 2019 by Aidan Corbett and Jack Pierse, achieved so-called unicorn status as a result of the deal pushing the company’s value above the $1 billion valuation level.

The second-biggest deal involved TranferMate, a Kilkenny-based payments company that is part of businessman Terry Clune’s ClunTech group, securing $70 million of equity financing – in a deal that also pushed its value to the $1 billion unicorn threshold.

Notable deals

Other notable deals during the period included the $16.5 million buyout of Dublin-based treasury management software company Salmon Software by Irish private equity firm Melior Equity Partners. Elsewhere, Stanhope Financial Group, a digital treasury and payment services provider, raised $10 million in a funding round.

Global fintech investment declined 3 per cent to $107.8 billion in the first half of this year, but remained “remarkably resilient compared to historical trends, given the challenges affecting the broader investment market, including geopolitical uncertainty, growing inflation and increasing interest rates”, KPMG said.

However, investment across the Europe, Middle East and Africa regions dropped 15 per cent during the period, driven by a 50 per cent decline in mergers and acquisitions (M&A) deal value to $7.2 billion.

EMEA only saw two $1 billion-plus (M&A) transactions in the first half, the $3.9 billion merger of Italy-based payments giant Nexis and SIA, and the $1.8 billion acquisition of UK-based Interactive Investor, an investment platform, by Abrdn.