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FinTech: Europe’s Most Value Creative And Vibrant Investment Sector

Finch Capital in partnership with Dealroom released a detailed data analytical report titled ‘The State of European FinTech, 2019 edition’, and reveals the drivers behind the strong value creation, the investors and the buyers of the fintech over the last five years.
by: Finch Capital & Dealroom
photo: Austin DistelUnsplash

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According to the report, Fintech is Europe’s largest investment category (20% of all global investments) and is more prevalent in Europe than in Asia and the USA. European investors dominate with little role of non European investors until a much later stage (Series C+).

There is a good mix between UK and continental European investors that lead the Seed and Series A/B stages with several new managers emerging since 2013 building on the Fintech momentum.

“The report shows FinTech proven to be more than a buzzword, creating €150B in value, many jobs, better experiences & products for European consumers. The next wave of enabling Financial Technology will be less visible but even more value accretive as it will tackle the inefficiency of the Financial Industry and can easily add another €150B in value,” said Radboud Vlaar, Founding Partner, Finch Capital.

“Europe’s next €10B+ or even €50B+ startup could very well emerge out of fintech.”

The report analyzed four verticals of Financial Technology: Banking & payments, Insurance, Real Estate and Enabling Financial Technologies. The strongest investment momentum during the last decade has been in Banking & Payments, but data shows it is shifting to the enabling technologies, such as AI and IoT.

European fintech exits have totalled €83B since 2013. On top of that, the current pipeline of fintech startups valued over €1B+ is worth EUR 45B (unrealised value). By both measures, European Fintech companies have created over 2x more value than any other sub-sector in tech in Europe. The exit landscape over the last years shows an interesting picture with only ±5% of the value of exits being realised via trade sales to traditional financial institutions.

Based on the analyses traditional Financial Institutions have not engaged in M&A above the €500m mark, as incumbents cannot justify much bigger transactions, given they trade at 6-7x P/E and tech companies typically trade at 22-50x P/E.

“Europe’s next €10B+ or even €50B+ startup could very well emerge out of fintech. The term Fintech covers a vast space, from full-stack payment services like Adyen, to challenger banks like Monzo, to enabling tech like UiPath. With so much happening in the space, we’re excited to publish a comprehensive overview of the different areas of fintech, in partnership with Finch Capital, who know the space extremely well,” concluded Yoram Wijngaarde, Founder and CEO of Dealroom.

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