The big takeaways:
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Payments led in funding and deal count. Despite the slowdown, payments firms comfortably outperformed banking, wealthtech, and insurtech companies. Payment firms’ $3.4 billion across 188 rounds in Q4 dwarfed banking, the next biggest fundraiser with $1.8 billion across 62 rounds.
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Early-stage investing proved resilient. The share of deals comprising early-stage payment firms reached 65%, a five-year high. Late-stage firms made up just 11%, a five-year low. The dealmaking landscape is shifting, and late-stage startups will have to work harder to win funding while earlier-stage paytechs can keep attracting investors.
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The US maintains its dealmaking lead. In Q4, US-based firms made up 35% of all payment startup investments, the biggest share of any region. Asia and Europe made up 27% and 18%, respectively.
The bottom line: The latest figures highlight the harsher funding climate for payment providers, mirroring a wider trend affecting other sectors. Given the unpredictable economic outlook, this will likely continue for the short term.
Payment firms, particularly later-stage companies, must work harder to secure investment. They might be better off cutting costs and scaling back expansion plans until the funding climate improves.
This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.