Fintech Funding in Europe is Soaring; Funding in New York is Sputtering

Although fintech deals in New York increased for the second straight quarter, the size of growth in Silicon Alley is contracting, according to a new report from data provider CB Insights.

Fintech deal activity rose 26% from the fourth quarter of 2016, but was 33% below the same quarter last year, which included significant funding to Oscar and Betterment, according to CB Insights. Funding to VC-backed companies in the city dropped 35% on a quarterly basis.

The deal making in California presented the opposite scenario from what the East Coast saw: Although funding for the first quarter to VC-back companies grew by 39% on a quarterly basis - spurred on by SoFi's $500 million financing that was led by Silver Lake - but fintech deals dropped for the second consecutive quarter, declining 28% from the same quarter last year, according to CB Insights.

CB Insights reports that overall U.S. fintech funding and deal totals are on pace to fall in the first quarter by about 20% from the first quarter in 2016. In fact, at the current run rate U.S. fintech deal activity is set to fall below 2013 levels.

Here are some other key data points for the U.S. fintech market, via CB Insights:

• The U.S. fintech market has now gone three straight quarters with fewer than 100 deals.

• U.S. fintech deal activity dropped 9% on a quarterly basis, while funding dropped 8%.

• The SoFi "mega-round" of funding was the largest U.S. deal during the first quarter.

Meanwhile, the fintech market in Europe is on track for a record year, with activity on pace to surpass 2016's total by 57%, according to CB Insights. A "burst of investment" over the first three months of 2017 has put total funding dollars on pace to clear $2.6 billion at its current run rate.

European VC-backed fintech companies raised $667 million across 73 deals in the first quarter of 2017, which represents a staggering 121% increase in funding over the first quarter of 2016 and a 38% jump in deals.

Here are some other key data points for the European fintech market, via CB Insights:

• The top 10 deals in the first quarter for venture-backed fintech startups raised more than $405 million in total funding, passing the $100 million mark for the first time.

• The overall median deal size rose 53% on a quarterly basis to $4.6 million.

• German VC-backed deals grew by 143%, while funding jumped by 341%.

You can read the full report from CB Insights here.

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