US VC Funding and Fintech Deals Dip In Q3

October 17, 2019 | FinTech, Venture Capital

US venture capital and fintech funding both declined in Q3 of 2019 compared to the previous quarter.

According to a CB Insights MoneyTree report US VC  funding declined 15% while Fintech funding declined by 27%.

US VC funding

US VC firms raised $26 billion in Q3. The number of deals also fell by 16% to 1304 compared to Q2. Even a year-on-year comparison showed a declining trend: in the same quarter last year 1528 companies raised $29.5 billion.

Not everything was gloom and doom, however. The number of unicorn companies valued above $ 1 billion has scaled 180, a new record.

Again, US VC funding during 2019 stands a reasonable chance of taking out 2018, which raised a record $ 117.2 billion. Year-to-date 2019 funding is positioned at $ 82.6 billion.

US fintech funding

In a sign of declining funding trends, US fintech funding during Q3 of 2019 showed that 147 companies raised a total of $ 3.8 billion. This was down from Q2, when 164 deals raised a total of $ 5.2 billion.

In comparison, in the year-ago quarter, 182 deals raised $3.1 billion, so there was a slowdown here too, though deal numbers were higher.

US VC funding: Is the problem carrying over from China?

Chinese venture capital deals fell 77% to $9.4 billion during the second quarter of 2019 – the first time in five years that venture capital investment has trended lower in China

Several factors have contributed to the slowdown in Chinese venture capital investment. Those factors include the Huawei imbroglio, slow progress in the China-US trade talks, and the recurring allegations by the US of Chinese theft and misuse of intellectual property.

What are startups thinking?

A report on the US Startup Outlook 2019 by Silicon Valley Bank said six in 10 US entrepreneurs, typically a positive-thinking group, expected business conditions to improve compared with 2018. However, nine percent believed that conditions would grow worse. Challenges were fundraising and the US-China trade policy.

It does seem from Q3 numbers that US VC funding and fintech raising are on the back foot, but there’s still hope for the rest of the year.

[Related Story: Preqin and Vertex VC Report Shows $1 Trillion Market on Tap]

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