Chris Skinner's blog

Shaping the future of finance

When the going gets tough, the tough ask questions

Chris Skinner Author Avatar

There are a number of numbers being bandied around regarding the major slump in the fintech sector over the past two years. The latest one that I picked up on is from the Indian data intelligence firm Tracxn, stating that UK fintechs raised just $4.3bn in 2023, a sharp drop from $11.2bn in 2022, which itself was down 13% from $12.9bn in 2021. Interestingly, Seedcamp, Techstars and Anthemis were the most active investors in the UK Fintech sector overall during the year, while SoftBank Vision Fund was the leading late-stage investor.

Even worse is the state of fintech in India where Tracxn reckon funding slumped by 63%.

This is consistent with many other reports, such as the halving of venture investment in 2023, according to Crunchbase data. In 2023, total VC spending in the financial services and fintech sector, which just a few years ago was the top sector for startup funding globally, totalled $43 billion, its lowest level in six years. That’s down more than 50% year over year from the $89.5 billion invested in financial services in 2022, and even more dramatically from the $143 billion invested in the sector in the peak market of 2021.

Innovate Finance report that global fintech investment dropped by a steep 48% in 2023 compared to 2022, with $51.2 billion dollars invested into the sector across 3,973 deals from Seed through Series I.

Meanwhile, narrowing things down, S&P state that venture capital flows into financial technology companies plunged globally by 36% year over year to $6 billion in the third quarter of 2023.

And this is not confined to Europe, America and India. For example, Latin American FinTech companies saw a 60% drop in funding during 2023 compared to 2022, although the United Arab Emirates saw a rise in funding of 92% last year and the Saudi fintech markets are also seeing unprecendented growth.

The lists, reports and numbers go on and on and on and, in most parts of the world, times are hard.

The thing is that this is not just happening in fintech but tech in general, and it has a knock-on effect where VC’s are finding investors being far more cautious. If VCs have no funds, then start-ups have no funding.

An example is Insight Partners, one of the most reputable Silicon Valley VC funds. As The Financial Times reports Insight Partners, considered one of the highest-rated venture capital managers, has delivered an average net internal rate of return of 22 per cent over time, according to one person familiar with the matter. But investors have committed just $2bn of a planned $20bn fund. That is a sharp fall from the $20bn that Insight raised in 2022.

They go on to call out Tiger Global, another major VC investor in tech. Tiger was forced to write down its venture investments by a third after pumping billions of dollars into tech start-ups at the peak of a funding boom in 2020 and 2021. Investors have committed around $2bn of its planned $6bn new fund and its target was just over half the size of the last fund it raised.

In other words it is the knock-on effect of trickle-down economics. If investors are spooked, they won't invest in fund managers; if fund managers have no funding, they cannot invest in start-ups; if start-ups cannot get funding, they must do something else. The question is what?

Well, everything is a struggle right now, as I started recording back in October 2022 and when the going gets tough, the tough get going*. This is why there is lots of advice out there about what to do in this tightened climate. I particularly like this Fast Company article from a year ago, that gives some well-informed advice.

Until recently, the VC space was undergoing a boom cycle, where the cost of capital was low, more companies were getting funded, valuations got higher, and the competition for funding rounds increased. However, as inflation increased, the cost of capital continued to rise which has led to a downturn, where opportunities are now being viewed through different lenses with more conservative projections and valuations. The boom-and-bust cycle is not new, however, some cycles are more extreme than others. Fortunately for founders, there are still opportunities to fundraise. However, the rules of the game have changed and founders must respond accordingly. So, how can founders fundraise in these conditions? It will require founders to manage costs much more carefully, master the art of selling, be hyper-focused on profitability, and look outside traditional investment sources. Here are five things to keep in mind:

  1. Shorten your window to profitability and self-fund (if possible)
  2. Create a balance
  3. Get good at selling
  4. Look outside of traditional VC sources
  5. Leverage all factors within your control

I also liked this advice from leadership coach John Williams:

Statistically, the odds against any human being even existing are monumental. Add the odds against you being who you are, and the only logical conclusion is that you are impossible! So why are you here? What greater good are you serving? The two most important days of your life are the day you were born and the day you discover your WHY. This is where responsibility comes into play. You can’t just sit back and wait for inspiration to hit you or hope that one day you will wake up and magically know your greater purpose. If you want to connect with your greater purpose, then you must take responsibility for understanding who you really are.  

In other words, this is a great time to focus upon your inner soul, and realise who you are and what you are doing here. Do you ever ask yourself those questions?

There’s no rocket science there, but it is sound advice.

Meantime, don’t expect 2024 to pick up much faster. It’s going be a long, slow slog folks. Nevertheless, there are some areas that are still developing nicely. Going back to that Crunchbase summary: “the worst of the fintech winter is behind us, and 2024 will look more like a pre-pandemic 2019,” according to Nigel Morris, managing partner at investment firm QED. “Fintech deal volumes will finally stabilize before rising again — the first climb since 2022 Q1 — and funding numbers will look like they did five years ago. The difference this time is that while 2021 saw a massive step function of digital adoption, 2024 will see the continued evolution of that change.”

Equally, there are three areas of investment that could be meaningful in 2024, according to Mark Fiorentino, a partner at Index Ventures who was previously at digital payments giant Stripe: the next generation of fintech infrastructure, finance tech for underserved industries, and the CFO software stack.

There is still work to do, which is why there are some who are doing OK.

World’s first trillionaire could be seen in next 10 years



* when I used to hear this Billy Ocean song, I thought he was singing “when the going gets stuffed, the stuffed get going”

Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

What is the future?

Learn more

Learn more about Chris

About Chris Skinner

The Past, Present And Future Of Banking, Finance And Technology

Fintech expert Chris Skinner: countries need digital transformation to remain competitive

Join me on Linkedin

Follow Me on X!

Hire Chris Skinner for dinners, workshops and more

Learn directly from from one of the most influential people in technology, gain insights from the world's most innovative companies, and build a global network.

Chris’s latest book

Chris Skinner’s ‘Digital For Good’ Book Launch Event – CFTE

Top 50 Global Thought Leaders and Influencers on FinTech 2023

Chris Skinner
Commentator, CEO of The Finanser and best-selling author at The Finanser

Thinkers360 Thought Leader

Contact Me

Global Awards

Lifetime Achievement Award

Global 100 - 2024 Winner

Chris Skinner - Financial Markets Advisor of the Year - The Finanser - UK 2023

Best Financial Markets Advisor of the Year 2023

30 Best Regtech Blogs and Websites 2023

Kids creating the future bank | TEDxAthens

Captain Cake and the Candy Crew

Captain Cake Winner of a Golden Mom’s Choice Award


Alex at the Financial Services

Gaping Void's Hugh MacLeod worked with the Finanser