In 2015, the volume of fintech deals done peaked at $14.6 billion with 848 different deals, but has now reached a declining state in the amount of deals and investments made from VC firms. In 2016, those numbers have declined to $12.7 billion and 836 different deals, which is a YOY% of -13% for the value of all deals. This drop was due to smaller deal sizes done by investors whose hesitance is caused by political instability and the future of the economy with a new regime. This has caused more startups to struggle since most upcoming fintech businesses rely heavily on VC funding to operate with a profit. It is predicted that this trend will continue for most of 2017 and suggested that fintech startups evaluate and adapt their business models to the current economic condition. Those fintech firms who do not rely on VC backed funding are rapidly growing to above $19 billion. While there is room for caution to invest in the future economy, one must evaluate how fintech currently compares to its competition in traditional banks. Fintech companies offer the same services as normal banks but with lower rates and fee with greater efficiency. They also introduce Peer-to-Peer transactions that many institutions are trying to adapt for their clients. If you consider that the startups not funded by VCs are lucrative, then any VC or investor shouldn’t worry about any outside factors and focus on the high returns they will have.
URL: http://www.businessinsider.com/fintech-deal-sizes-are-shrinking-2017-2