In Q2 2024, global enterprise fintech secured a total of US$4.6 billion in venture capital (VC) funding across 315 deals, a 27.1% year-on-year increase and 2.2% growth quarter-on-quarter, breaking the downward trend of the previous two quarters, data from PitchBook show.

This increase was driven by larger deal sizes. In H1 2024, enterprise fintech companies logged a median VC deal size of US$5 million, up 11.3% from 2023’s median of US$4.5 million. Notably, late-stage deals experienced a 20.1% jump in median deal size to US$9.9 million.

Other stages, however, decreased from their 2023 median, with pre-seed and seed declining 22.8% to US$2.2 million, early-stage VC falling 6.2% to US$5 million, and venture growth decreasing 31.5% to US$17 million.

In Q2 2024, capital markets and CFO stack led VC funding activity. Capital market startups closed 35 transactions, securing a total of US$1.6 billion, or 34.8% of all enterprise fintech deals during the period. The vertical recorded some of the quarter’s largest enterprise fintech rounds including Clear Street’s US$685 million Series B, AlphaSense’s US$650 million acquisition financing to purchase competitor firm Tegus, and Finbourne’s US$70 million Series B.

CFO stack followed capital markets, securing the second highest deal value in Q2 2024 at US$1.2 billion (26%) across 76 transactions. Notable deals included Kapital’s US$165 million Series B, Ramp’s US$150 million Series D2, and FloQast’s US$100 million Series E.

Enterprise fintech exits and M&A

Despite somewhat of a rebound in VC funding, exits and mergers and acquisitions (M&A) in the enterprise fintech space remained subdue, with only US$1 billion of recorded exit value across 33 deals in Q2 2024.

Notable acquisitions during the quarter included AlphaSense’s US$930 million acquisition of Tegus, Aurionpro Solutions’ acquisition of a majority stake in Arya.ai for US$16.5 million, Digits’ acquisition of Basis, Stripe’s acquisition of Sumatra, Paystand’s acquisition of Teampay, and Toggle AI’s acquisition of Atom Finance.

Noteworthy deals also took place for public companies, such as Nuvei’s all-cash take-private deal by private equity (PE) firm Advent International, Shift4’s acquisition of a majority stake in point-of-sale (POS) payments company Vectron Systems, and Global Payments’ acquisition of UK-based payment service provider Takepayments.

Only one initial public offering (IPO) occurred in Q2 2024. It involved Trust Fintech, a bank technology provider, which listed on the National Stock Exchange of India and recorded an exit value of US$21.3 million.

BaaS, AI, crypto payments as top enterprise fintech verticals

The PitchBook report also highlights some of the key trends driving enterprise fintech in Q2 2024. First, banking-as-a-service (BaaS) continued to dominate headlines during the quarter amid heightened regulatory scrutiny following the collapse of BaaS platform Synapse.

Synapse filed for Chapter 11 bankruptcy in April 2024 after a combination of internal mismanagement, failed partnerships, and broader market challenges led to the company’s downfall. The collapse impacted nearly 100 fintech companies and millions of customers, TechCrunch reported, leaving around US$160 million in deposits inaccessible and raising concerns about the stability of the BaaS model and the fintech industry’s heavy reliance on a few service providers.

Despite these setbacks, fintech companies continued to explore BaaS in Q2 2024: FIS launched in May its BaaS platform, Atelio; Equals Money, a payment solutions provider, introduced in June a new BaaS product; Atmos Financial expanded its relationship with banking partner Five Star Bank in June to explore BaaS opportunities; and Velmie announced in May a partnership with Unlimit to bring together Velmie’s platform with Unlimit’s cutting-edge BaaS offering.

Artificial intelligence (AI) is another top trend outlined by PitchBook, with fintech leaders and banks continuing to explore generative AI (genAI) applications in Q2 2024. In May, Visa introduced its new Visa Account Attack Intelligence (VAAI) tool, which uses genAI to detect and prevent enumeration attacks in card-not-present transactions. That same month, JP Morgan unveiled its IndexGPT tool, which provides an automated approach to curating thematic investment baskets.

Finally, crypto payments gained notable traction in Q2 2024 as leading payment players embraced blockchain solutions. In April, Stripe announced it would begin supporting global stablecoin payments using Circle’s USDC. That same month, Block, the company behind Square, Cash App and other services, announced a new program allowing merchants using Square’s solutions to convert a percentage of their daily sales to bitcoin, TechCrunch reported. The firm also unveiled plans to expand its bitcoin mining ambitions from designing chips to developing a full bitcoin mining system.

In Q2 2024, enterprise fintech startups continued to capture the majority share of VC deal value in the fintech sector, making up 51.9% of total VC, according to PitchBook.

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