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Another bill has come in for Meta for failing to comply with the European Union’s General Data Protection Regulation (GDPR) — but this one’s a tiddler! Meta-owned messaging platform, WhatsApp, has been fined €5.5 million (just under $6M) by the tech giant’s lead data protection regulator in the region for failing to have a lawful basis for certain types of personal data processing.

Back in December, Meta’s chief regulator, the Irish Data Protection Commission (DPC), was given orders to issue a final decision on this complaint (which dates back to May 2018) — via a binding decision from the European Data Protection Board (EDPB) — along with two other complaints, against Facebook and Instagram.

Those two final decision emerged from the DPC earlier this month, when it announced a total of €310M in penalties; and gave Meta three months to find a valid legal basis for that ads processing. But while the latter pair of GDPR decisions tackled Meta’s lack of a valid legal basis for processing user data to run behavioral advertising (aka, its core business model), with the WhatsApp decision Ireland appears to have skirted the ads processing legality issue entirely — since its enquiry has focused on the legal basis Meta claimed for “service improvements” and “security”.

Here Meta had (similarly) sought to rely on a claim of contractual necessity — but Ireland has now found (via EDPB order) that it can’t.

The DPC has given WhatsApp six months to mend its ways for these purposes of data processing. Meaning it will need to find a way to lawfully process the data (perhaps by asking users if they consent to such purposes and not processing their data if they don’t).

But the regulator has simply declined to act on a parallel EDPB instruction telling the DPC to investigate whether WhatsApp processes user (meta)data for ads. And this has led to fresh cries, by the original complainant, of yet another stitch-up by the much criticized Irish regulator.

In a press release, noyb, the privacy rights not-for-profit behind the original strategic complaints pulls no punches — arguing that Ireland is essentially giving the EDPB the finger at this point.

“We are astonished how the DPC simply ignores the core of the case after a 4.5 year procedure. The DPC also clearly ignores the binding decision of the EDPB. It seems the DPC finally cuts loose all ties with EU partner authorities and with the requirements of EU and Irish law,” said its honorary chairman, Max Schrems, in a typically pithy and punchy statement.

While messaging content on WhatsApp is end-to-end encrypted — which means, assuming you trust Meta’s implementation of the Signal protocol, that this information should be protected from its prying eyes — the social media giant can still glean insights on users by tracking their WhatsApp metadata (aka, who’s talking to who, how often etc) — and also by connecting the dot and users to accounts and public (or otherwise non-E2EE digital activity) across other services it owns (and, potentially, third party services it’s seeded with tracking technologies)… So, basically, Meta’s data-gathering net is long (and wide).

That means there are certainly questions to be asked about how it might be processing WhatsApp users’ data for marketing purposes — and what legal basis it’s relying on for any such processing.

WhatsApp users may remember the major controversy that kicked off back in 2021 — when the platform announced an update to its T&Cs that it said users had to accept in order to carry on using the service. It wasn’t clear exactly what was changing in the updated terms. But, whatever was going on, Meta sure wasn’t giving WhatsApp users a free choice over the matter! And while regulatory attention on that issue led to what appeared to be a bit of a climbdown by Meta, which stopped sending aggressive pop-ups demanding EU users agree (or leave), the whole episode led to widespread confusion about what exactly it was doing with WhatsApp user data (and how it was doing it, legally speaking).

The episode also sparked some consumer protection complaints. Which led, last summer, to the European Commission giving the company a month to fix the confusing T&Cs and “clearly inform” consumers about its business model.

None of the confusion and mistrust around WhatsApp’s T&Cs was helped by a much earlier U-turn on syncing user data with Facebook — when the platform flipped a founder pledge never to cross those streams. In short, it’s a mess — and a mess that Europe’s regulators can’t claim to have cleaned up.

Yet despite all the ongoing confusion and privacy concerns, the DPC appears spectacularly uninterested in taking a proper look at how WhatsApp may be processing user data for ads.

“The DPC has now limited the 4.5 year procedure to the minor issues of the legal basis for using data for security purposes and for service improvement,” writes noyb, accusing the regulator of essentially ignoring this major component of its complaint. “The DPC thereby ignores the major issues of sharing WhatsApp data with Meta’s other companies (Facebook and Instagram) for advertisement as well as other purposes.”

The DPC’s press release announcing its final decision almost entirely avoids making mention of behavioral advertising — until the finale, when the phrase does crop up. But only because it quotes the EDPB’s instruction to it — to conduct a fresh investigation of “WhatsApp IE’s [Ireland’s] processing operations in its service in order to determine if it processes special categories of personal data (Article 9 GDPR), processes data for the purposes of behavioural advertising, for marketing purposes, as well as for the provision of metrics to third parties and the exchange of data with affiliated companies for the purposes of service improvements, and in order to determine if it complies with the relevant obligations under the GDPR.”

So the opportunity was there for Ireland to grasp the nettle on WhatsApp users’ behalf and follow the data streams to draw a clear picture of what Meta’s ownership of the E2EE messaging platform really means for users’ privacy. (And, remember, Meta’s behavioral ad targeting empire currently lacks a lawful basis for ads processing on Facebook and Instagram in the EU.)

But instead of getting on with investigating WhatsApp’s data processing, the Irish regulator has opted to instruct its lawyers to challenge the EDPB’s binding decision and seek to get it annulled in court.

Update: Meta has now responded to the DPC decision — sending us this statement, attributed to a WhatsApp spokesperson, in which it confirms it will appeal:

WhatsApphas led the industry on private messaging by providing end-to-end encryption and layers of privacy that protect people. We strongly believe that the way the service operates is both technically and legally compliant. We rely upon contractual necessity for service improvement and security purposes because we believe helping keep people safe and offering an innovative product is a fundamental responsibility in operating our service. We disagree with the decision and we intend to appeal.

WhatsApp slapped for processing data without a lawful basis under EU’s GDPR by Natasha Lomas originally published on TechCrunch

In late-2020, Presso pivoted. It made a lot of sense at the time. People weren’t traveling much and therefore weren’t particularly hung up on getting their business attire dry-cleaned. Certainly the hospitality industry — which had been identified as a major potential revenue sort –0 had effectively ground to a screeching halt.

Around that time, the film industry was looking for a quick, safe and efficient way to clean wardrobes at the height of the pandemic, and as it happens, Presso’s hometown of Atlanta is among the top two or three filming locations in the U.S. Ultimately, however, that partnership would prove short-lived.

“What we found out a few months into it was most of these productions only shoot for a few months out of the year,” co-founder and CEO Nishant Jain said on a call with TechCrunch. “So, every few months, we have to do reverse logistics, which, for an early-stage company, economically, just doesn’t make sense.”

It was a good temporary partnership and a proving ground for Presso’s robotic dry-cleaning kiosk. Amid widespread reopenings, however, Presso is returning to its initial client base of hospitality/hotel companies and real estate firms. The startup’s newfound focus is being propelled by an $8 million seed raise from a slew of high-profile backers, including Uncork Capital, 1517 Fund, AME Cloud Ventures, HAX, SOSV, Pathbreaker Ventures, VSC Ventures and YETI Capital.

The round brings Presso’s total to-date funding up to $10.1 million. It’s a lot for what is still an extremely small company with a headcount of 14. Certainly no one can blame the company for a conservative approach to growth over the past three years. The new funding will be used, in part, to grow the team, bringing its number up to around 20-25 people within the next year. It will also go toward scaling its product and meeting its 80+ bookings.

Presso is using a hardware-as-a-service model to effectively lease its offering to clients. The businesses both set pricing to have an article of clothing dry-cleaned and take a revenue share out of the bottom line. The latter is adjustable, based on the amount they pay up front.

In additional to developing its own hardware and leasing its machines, Presso is creating other key pieces of the puzzle, including a newer, greener fluid for the dry-cleaning process. “We had chemical engineers to develop our own liquids,” says Jain. “They’re far more organic; 70% of the industry still uses industrial solvents. We invented something that is orders of magnitudes better than we’ve ever seen.”

In the future, it could potentially license the liquid to third parties. For now, however, Presso is focused on building — and distributing — its dry-cleaning kiosks.

Dry-cleaning robotics startup Presso pulls in another $8M by Brian Heater originally published on TechCrunch

Successful startup founders do not spring fully formed from the head of whatever god or goddess keeps tabs on entrepreneurs. It takes time to educate yourself, learn essential skills and acquire a smart, connected network. Here’s the great news — TechCrunch Early Stage, taking place April 20 in Boston, Massachusetts, is designed to help both early and future founders accelerate the learning curve.

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Leading founders: They’ve been in your shoes. Even better, they’re willing and able to help you take the steps to get to where they are now.
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Prepare for a full day packed with expert-led workshops and panel discussions, plus small-group roundtable discussions with Q&As that really let you dig into a specific topic. All of it’s designed to give you the tips, skills and understanding you need to kick off those bootstraps and grow with your sight set on unicorn status. Take a look at some of the topics from TC Early Stage(s) Past.

Understanding product-market fit and how to find it
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TechCrunch Early Stage takes place on April 20, 2023, in Boston. Buy your early-bird ticket and save $200. Then get ready to learn new skills, accelerate your learning curve and move your startup dream forward.

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Connect and collaborate with new founders at TechCrunch Early Stage 2023 by Lauren Simonds originally published on TechCrunch

Sophia Amoruso, the creator of Nasty Gal and Girlboss, has started a movement, has empowered generations of women and done the entrepreneur victory lap – the last of which she doesn’t necessarily recommend to other founders because “it’s a distraction.” She’s also raised down rounds, run out of venture capital funding, filed for bankruptcy and been sued.

“I’ve seen the full gamut of what worked and what didn’t,” the entrepreneur said in an interview with TechCrunch. “It’s the not-so-great stuff that I can often help founders anticipate, or just avoid.”

It’s her high-profile and rocky experience in Silicon Valley’s spotlight that has finally given Amoruso the operating experience needed to launch her own venture firm, Trust Fund.

Trust Fund, named ironically, Amoruso says, because “nobody handed anything” to her, is launching with a $5 million target, targeting a check size between $50,000 to $150,000. She’s already landed checks from the who’s who in tech. Prominent investors include a slew of a16z partners such as Marc Andreessen, Andrew Chen and Chris Dixon, as well as entrepreneur Ev Williams, icon Paris Hilton and support from investors Ryan Hoover and Cleo Capital’s Sarah Kunst.

Trust Fund is looking to back digital consumer companies, and has already put money into an undisclosed workplace collaboration tool. Amoruso has been angel investing for four years, and has put $1 million of her own capital into 23 startups including Pipe, Liquid Death and Public.

“As a small fund, I am not necessarily looking for diamonds in the rough,” Amoruso said. She noted that other funds have the resources to do more due diligence and legitimize companies, while Trust Fund will look for social proof in some way. She prefers lean companies that make money and behave like they’re bootstrapped.

Alongside the launch, Amoruso tells TechCrunch that she is dedicating a $1 million allocation of the fund to people outside of her network. Accredited investors are invited to apply to write checks, between $2,000 and $10,000, into the debut investment vehicle.

She’s looking for diversity on her cap table – “because there’s a lot more women who can write $2,000 checks than there are who can write $200,000 checks.” Community raise aside, she doesn’t have a diversity mandate when it comes to portfolio construction.

“I plan to invest in men and women, and everything in between. And if anything, like why not invest in the privilege and ride the coattails of a dude?” Amoruso said. “As a woman, why wouldn’t I want to invest in the advantage that a man has, like, feel free to publish that – it’s true.”

While the entrepreneur is certainly looking outward to fuel her next venture, she’s also looking inward. A large part of Amoruso’s brand is associated with Girlboss, a word she coined to describe self-made, entrepreneurial women. Girlboss became a memoir, company, Netflix show, and movement associated with empowerment – before it twisted into a sexist trope, used to describe controversies around high-profile women in leadership, often stepping down from their posts.

Amoruso is no exception from this volatility. The entrepreneur stepped down from her company, Nasty Gal, in 2015 after being embroiled in multiple legal suits; as well as the difficulties of a growth at all costs mindset. “I’ve raised too high of a valuation at Nasty Gal, we were doing $12 million in revenue profitably when Index valued us at $350 million. The expectation of the next raise was to be at a billion dollar plus valuation was unrealistic.”

When asked about Girlboss, Amoruso said that it “was a huge part of my story. But also…at what point can I tell a new story?”

The entrepreneur views her past as both a fading story, and a competitive advantage, adding that she doesn’t “consider honesty a risk.” Among the attributes that the Trust Fund advertises as a value-add, she included: “building a non-shitty culture because we’ve done it wrong… and right” and “navigating the media when they love you and when they don’t.”

What’s clear is that similar to her past endeavors, the Amoroso brand is what is getting people to bet on her again. She has over 120,000 people newsletter subscribers, over 100,000 followers on Twitter and well over half a million Instagram followers. It’s a following she believes she can use to “evangelize” her portfolio companies, similar to celebrities, but also with operating experience that founders value during a downturn.

A16z’s Andrew Chen, who says he invested personally in Amoruso’s new fund, described her as a “0-1 founder who’s seen and done it all…[there are] very few people who’ve done all this and want to dedicate their career to helping the next gen of founders.”

Sophia Amoruso launches Trust Fund for founders by Natasha Mascarenhas originally published on TechCrunch

As FTX news subsided in recent weeks, the new CEO of the crypto exchange shared that he is exploring the possibility of restarting the company, according to a report from The Wall Street Journal.

John Ray III, the new FTX CEO, said in an interview that “everything is on the table,” in regards to reviving the bankrupt company’s international exchange and he has set up a task force to explore that opportunity.

WSJ also reported that Ray is looking into whether reviving the main international exchange would provide greater value to company’s customers and creditors as he and others try to return funds lost.

Earlier this week, FTX debtors identified $1.7 billion of cash and $3.5 billion of crypto assets and $3 million of securities, according to a company statement. This totals about $5.5 billion in liquid assets, which Ray referred to as a “herculean” effort to assess the firm’s financial position.

“We are making important progress in our efforts to maximize recoveries, and it has taken a Herculean investigative effort from our team to uncover this preliminary information,” Ray said in a statement on Tuesday. “We ask our stakeholders to understand that this information is still preliminary and subject to change. We will provide additional information as soon as we are able to do so.”

The debtors also provided context to both the international and US-based entities of FTX and its shortfalls. Debtors identified $1.6 billion of digital assets associated with the international exchange, FTX.com, $323 million of which was subject to unauthorized third-party transfers after it filed for Chapter 11 bankruptcy in November. About $426 million was transferred to cold storage under the control of The Securities Commission of The Bahamas, $742 million went to cold storage under FTX debtors control and $121 million is pending transfer to the debtors as well, according to the release.

Meanwhile, debtors identified $181 million of digital assets associated with the US-based entity, FTX US. About $90 million was subject to unauthorized third-party transfers after the bankruptcy filing, $88 million is in cold storage under FTX debtor control and $3 million is pending transfer to debtors’ control, it added.

Ray and the former FTX CEO Sam Bankman-Fried have clashed over the exchange’s position and whether or not it should have filed for bankruptcy. Bankman-Fried has shared his regrets in filing for bankruptcy for FTX and said in a recent Substack newsletter, Bankman-Fried insisted that if he were not “forced” to declare bankruptcy that the company would have been able to repay all its customers.

Bankman-Fried added, “there were numerous potential funding offers — including signed LOIs post chapter 11 filing totaling over $4b. I believe that, had FTX International been given a few weeks, it could likely have utilized its illiquid assets and equity to raise enough financing to make customers substantially whole.”

In the past, Ray said Bankman-Fried has “no ongoing role at FTX” and does not speak on the company’s behalf. In mid-December during a U.S. House Financial Services Committee meeting, Ray said there were “virtually no internal controls” for FTX’s risk management systems.

There were no audits of Alameda or its venture silo. But there were audits of FTX US and FTX.com, Ray said. The audits were done by Prager Metis and Armanino. “I can’t speak to the integrity or quality of those audits,” Ray said. “I don’t trust a single piece of paper in this organization.”

FTX’s new CEO says there’s possibility for exchange to restart by Jacquelyn Melinek originally published on TechCrunch

Sling TV, the DISH-owned streaming service, finished the year off with a substantial drop in subscribers, ending Q4 2022 with a loss of 77,000 subs.

As reported in an SEC filing on January 17, Sling TV now has a total of 2.33 million subscribers, down from 2.41 million in the previous quarter. While the company momentarily gained subscribers in Q3 2022, Sling TV now seems like it’s stuck in 2018 with its current subscriber base when it also had 2.33 million subs. In the fourth quarter of 2021, the live TV streamer had 2.49 million.

The drop in subscribers is likely due to the recent price hike and increased competition. Sling TV bumped up its plans by $5. Sling Orange and Sling Blue now each cost $40/month, whereas the bundle (Sling Orange + Blue) is $55/month. The main reason that customers switch over to live TV streaming services is that they no longer have to pay an arm and a leg for cable. However, it seems like no one can escape the high prices of live TV.

It’s also possible that some customers canceled their subscriptions when 17 Disney-owned channels briefly disappeared from Sling TV over a carriage dispute in October 2022. The channels, which included ABC, the Disney Channel, ESPN, FX, Freeform and National Geographic, were restored two days later. However, it’s possible that some customers never re-subscribed.

Dish reported in the SEC filing that it has 9.75 million pay-TV subscribers in total, with 7.41 million customers subscribed to Dish TV, its satellite service. Dish TV lost approximately 200,000 subscribers.

The company has yet to report its financials, which will be revealed in its official fourth-quarter earnings report (no release date has been announced).

However, Sling TV is confident that 2023 will be a promising year for the streamer. In a recent interview with TechCrunch, Sling TV President Gary Schanman hinted at the possibility of a free offering, which could help to boost its audience.

“Free is part of our thoughts about how we think about that engagement with the customer. We want a lifelong relationship with the subscriber where they see value in what we provide — and [free content is] a piece of that,” Schanman said.

While it’s unclear exactly what Sling TV has in the pipeline, if the company were to offer free streaming options, there’s no doubt that more customers would flock to the service. It would also put Sling TV in better competition with free, ad-supported services like Roku, Freevee, Pluto TV, Xumo and Plex. YouTube was the latest company to experiment with a free ad-supported TV channel offering.

Sling TV also just launched new features like user profiles and a Sports Scores feature.

Sling TV’s subscriber base continues to tank, loses over 75K subs in Q4 by Lauren Forristal originally published on TechCrunch

Private investment in the space economy dropped by 58% in 2022 compared to the year prior, with macroeconomic headwinds battering private and public markets, according to a new analysis from New York-based Space Capital.

But while 2023 is shaping up to be another hard year for startups, Space Capital’s report maintains that the external pressures on companies will be a net positive for the industry overall.

“Quality companies with product market fit, positive unit economics, and strong leadership will continue to get funded, although valuations will be more in line with historical averages,” Space Capital managing partner Chad Anderson said in the report. “We believe that less speculation will result in fewer competitors, and a larger talent pool that will make the next two years an attractive time to start and invest in space tech companies.”

Despite the overall bearish market environment, there was one clear winner last year: SpaceX, which managed to raise $2 billion, its second-largest annual raise since the company was founded in 2002. Notably, other companies that landed major rounds are explicitly targeting the defense sector: these include defense technology startup Anduril, which closed a $1.5 billion Series E; Shield AI’s $225 million Series E; and Slingshot Aerospace’s $40 million Series A.

Overall, late- and growth-stage companies were most highly impacted by the more conservative venture investing environment last year, while early-stage investments declined only 4% year-over-year. The total number of rounds in 2022 also decreased by 30% compared to the year prior.

While the overall picture from last year is negative, investing did pick up in the fourth quarter: 63% of the year’s deals were made in the last quarter, representing $2.6 billion.

The United States continues to lead in total private investment in space companies, with 46% of deals happening here, the report found. China comes in second place with 29%. China’s investment in space infrastructure, which includes launch and tech to build and operate satellites and other space-based assets, continues to climb.

The report also looks at emerging industries, like private space stations, in-orbit servicing, and mining companies. These companies saw a 63% drop in investment. The majority of the rounds in the fourth quarter of 2022 were early stage, which reflects that the industry is still very much in its beginnings.

Space Capital tracks 1,791 companies across the space sector. Over the last ten years, investors have now poured $273.3 billion of private equity into these companies.

Private investment in space dropped 58% last year, even with SpaceX, Anduril monster raises by Aria Alamalhodaei originally published on TechCrunch

Trunk, a startup that aims to build a toolkit that helps developers build and ship their code faster, today announced the launch of its latest product: CI Analytics. The new service helps developers understand how their CI Workflows (currently with a focus on GitHub Actions) perform in the real world — and if there are any trends they should be aware of.

Founded in 2021 by a group of former Uber engineers, Trunk already offers Trunk Check, a tool for checking code quality, and Trunk Merge, a service that orchestrates merging pull requests. With CI Analytics, it’s now expanding this feature set with another tool that tries to help developers work more efficiently.

“I’d run these surveys and the number one issue coming back from folks is ‘the hardest part of my job is landing code and merging code into main.’ That’s insane. We’re trying to build future-forward tech to make cars drive themselves and the hardest thing for the engineers is to put their code into the codebase,” Trunk co-founder and co-CEO Eli Schleifer told me of his time at Uber. “Every company has to invest a tremendous amount of money into this stuff and you really don’t want to hire 30 engineers — that’s how many were at Uber — to build this solution, because it’s not germane to your problem space. It’s just the core tax you pay.”

Schleifer described the new analytics service as an “engineering intelligence solution” that helps developers fix broken engineering workflows. He noted that while GitHub Actions has become very popular in a short amount of time, it’s also a bit of a black box. “There are a lot of engineering intelligence tools out there that will tell you that this engineer wrote this many lines of code or this many commits. We see engineering intelligence more as a tool to help the productivity of all the engineers,” Schleifer said. If Trunk can help these engineers find inefficiencies in their CI processes, then, he argues, it will make everybody in the engineering organization more efficient.

“Without a proper engineering intelligence solution, DevOps and engineering teams are left operating in the dark and engineers are left to guess at what parts of their build and test workflows are slowing down engineering,” said Schleifer. “Trunk CI Analytics eliminates the guesswork with beautiful trend lines, anomaly alerting, and the ability to perform deep historical analysis within a few clicks. Operating without this level of engineering intelligence can be the difference between shipping code on time and slowly grinding to a halt.”

The new service is now available to all Trunk users, with pricing starting at $7 per month and user (after a free two-week trial).

Trunk extends its developer toolkit with CI analytics by Frederic Lardinois originally published on TechCrunch

Yum Brands, the parent company of fast food chains KFC, Pizza Hut and Taco Bell, has confirmed that company data was stolen in a ransomware attack.

TechCrunch first learned of an apparent incident affecting Yum Brands earlier this week, which the Kentucky-based company confirmed in a statement on Thursday.

Yum Brands said a ransomware attack impacted “certain information technology systems,” prompting the chain to take some of its systems offline. The incident also led to the closure of roughly 300 restaurants in the United Kingdom for 24 hours, the company said.

Although the ransomware attack largely affected the company’s U.K. operations, Yum Brands said it notified U.S. federal law enforcement as its investigation continues.

Yum Brands said that the unidentified intruder responsible for the ransomware attack stole data from the company’s network, but added it had “no evidence” that customer data was stolen. It’s not clear if the company has the technical means, such as logs, to determine what specific data was exfiltrated.

It’s also unclear when the ransomware attack began or how the company’s systems were initially compromised. Yum Brands spokesperson Rob Poetsch declined to provide more details about the incident, referring TechCrunch to the company’s statement.

“While this incident caused temporary disruption, the company is aware of no other restaurant disruptions and does not expect this event to have a material adverse impact on its business, operations or financial results,” the company’s statement said.

Lorenzo Franceschi-Bicchierai contributed reporting.

Taco Bell, KFC owner says data stolen during ransomware attack by Carly Page originally published on TechCrunch

If you thought the fourth quarter of 2022 felt slow when it came to investment activity in the fintech space, that’s because it was. In fact, the three-month period marked the lowest quarter for U.S. fintech funding since 2018, according to CB Insights’ State of Fintech 2022 report.

But overall, while total fintech funding globally was down markedly last year compared to 2021, numbers were still higher than 2020.

Specifically, global fintech funding amounted to $75.2 billion in 2022, down 46% compared with 2021, but up 52% compared to 2020. The second half of the year was especially bleak. Only $10.7 billion of investment dollars went to fund fintech startups in the fourth quarter. About $3.2 billion of that, or nearly 30%, flowed into U.S.-based companies.

Meanwhile, global venture funding reached $415.1 billion in 2022, marking a 35% drop from a record 2021.

Overall, fintech deal volume fell 8% globally year-over-year to 5,048 in 2022. Notably, Africa was the only major region to see deals climb compared to 2021 – with a record 227 deals in 2022, a 25% increase year-over-year. A staggering 89% of 2022 deals in Africa were early-stage – a 5-year high for the continent and the highest among all other regions.

Still, funding on the continent remained lower than 2021 levels, noted Anisha Kothapa, CB Insights’ lead fintech analyst.

“This is due to increased access to technology in the region such as mobile devices and internet connectivity,” she wrote via email. “Currently, there’s a large proportion of Africa’s population that doesn’t have adequate access to financial products compared to other regions, so the potential deployment of fintech solutions exploded as access to technology like mobile phones and internet increased.

In the U.S, fintech funding in 2022 was down 50% to $32.8 billion. Yet deal size was only down 9%, signaling another trend we saw last year: early-stage deal share continued to dominate. On the flip side, mega round funding and deals fell 60% and 52% year-over-year, respectively.

Kothapa wasn’t surprised by the overall drop in investment activity given the macro-economic environment and recovery from COVID, which resulted in higher inflation and the Fed raising interest rates.

“2021 was a unique year that resulted from digital transformation needs during the pandemic,” she wrote. “However, on the positive side, 2022 numbers were higher than 2020. Therefore, investors did not shy away from giving capital. Instead, funding was given more to smaller, earlier-stage deals versus bigger, later-stage deals like we saw in 2021.”

Notably, the world saw a drastic decline in the number of new unicorns in 2022. Fintech specifically saw a total of just 69 total unicorn births in 2022, “a huge drop” (58%) compared to 166 births in 2021, according to Kothapa.

“This drop in unicorn births [for fintech] was actually smaller than what we saw for all VC-funded companies in 2022,” she told TechCrunch. “Unicorn births for all VC-backed companies dropped 86% year-over-year.

Other interesting tidbits from the report:

Insurtech M&A exits surged by 40% in 2022 to 81, up from 58 in 2021. Despite a poor showing in the public markets, insurtech was the only fintech sector to see a year-over-year increase in M&A exits. Overall, global fintech M&A exits dipped 20% year over year to a total of 742. We also saw a 72% YoY decline in fintech IPOs, from 82 in 2021 to just 23 in 2022. There were no IPOs or SPACs in the insurtech space in all of 2022 for the first time since the second quarter of 2020.
After a record-setting year, funding to LatAm & Caribbean-based fintechs declined 71% from $13.9 billion in 2021 to $4 billion in 2022. This was the greatest percentage drop in fintech funding for any region year-over-year. However, deals only fell 5% YoY – the lowest regional drop along with Canada.
Average global deal size dropped 40% to $18.7 million

While some are saying that 2022 saw a popping of the fintech bubble, Kothapa disagrees.

“This was more of a correction that resulted from an unforeseen event like the pandemic,” she said. “Digital transformation is extremely important for organizations now as they navigate more seamless ways to operate and fintech is a huge part of any business’s digital transformation.”

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Fintech in 2022: a story of falling funding, fewer unicorns and insurtech M&A by Mary Ann Azevedo originally published on TechCrunch