According to market intelligence platform Tracxn, funding for U.S.-based tech companies in Q3 of this year fell, both in comparison to the previous quarter as well as when compared to Q3 2023. Tracxn also reported that the number of tech unicorns actually increased this year compared to last year, with 13 new unicorns acknowledged in Q3 2024 compared to just five in Q3 2023. And while the report took this as a positive sign that “investor sentiment is stable,” there are other indications that the much-anticipated return to more robust funding trends for tech companies in general, and fintechs in particular, has yet to arrive.
Laura Bock, partner at QED Investors, was quoted in The Financial Brand back in January saying that “53% of fintechs will be cash out by Q3 2024 if they do not raise or exit.” We have a few more days before some of the research firms begin producing their Q3 reports on fintech funding, but clearly expectations are low.
Looking at our own Finovate alum funding for Q3 2024, we see plenty of evidence of the funding drought. In terms of the number of alums that reported receiving funding, as well as the amounts invested, Q3 alum funding for this year is as low as it has been in quite some time.
Previous quarterly comparisons
Q3 2023: More than $293 million raised by eight alums
Q3 2022: More than $1 billion raised by eight alums
Q3 2021: More than $1.1 billion raised by 14 alums
Q3 2020: More than $1.2 billion raised by 21 alums
Top equity investments
The top equity investment for Finovate alums in Q3 2024 was the $9 million raised by Illuma Labs. Headquartered in Plano, Texas, and founded in 2016, Illuma Labs debuted at FinovateSpring 2023 and has been a staple of our Spring and Fall conferences ever since. The company won Best of Show at FinovateFall in September for a demo of its Illuma Shield real-time voice authentication solution, now equipped with the latest deepfake detection technology to help prevent account takeover fraud.
Also noteworthy were the fundraisings from two brand-new alums: Dotfile, a regtech based in Paris, France, which debuted at FinovateEurope in February; and Scamnetic, an AI-powered anti-fraud solution provider that first appeared on the Finovate stage at FinovateFall in New York last month.
Here is our detailed alumni funding report for Q3 2024.
July 2024: An undisclosed amount raised by one alum
August: More than $1.3 million raised by two alums
September: More than $15 million raised by three alums
If you are a Finovate alum that raised money in the third quarter of 2024 and do not see your company listed, please drop us a note atDeFi Daily News. We would love to share the good news! Funding received prior to becoming an alum not included.
Photo by Kindel Media
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In conclusion, the funding landscape for tech companies, particularly fintechs, in the third quarter of 2024 has seen a decline compared to previous years. Despite an increase in the number of tech unicorns, overall funding amounts have not reached the levels seen in past quarters. The top equity investments in Q3 2024 show promising developments for some Finovate alums, but the industry as a whole is still facing challenges in securing adequate funding.
As we await further reports on fintech funding in Q3 2024, it is evident that the industry is experiencing a funding drought that has yet to be alleviated. The success stories of companies like Illuma Labs, Dotfile, and Scamnetic provide hope for future funding opportunities, but the overall trend signals a need for increased investor confidence and commitment in the tech sector.
For more insights and updates on the latest trends in the world of fintech and tech investments, be sure to check out DeFi Daily News for more informative articles.
