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Fintech funding in Europe and UK soars

The number of deals exceeding $20m in funding has grown.

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The number of deals exceeding $20m in funding has grown.

The deal size of fintech funding has been steadily growing since 2013, with a new report estimating that capital invested into $20m or more have increased at an annual growth rate of 75 per cent.

The report, from investment bank Magister Advisors and fintech association Innovate Finance, also found that many late-stage fintech firms are being funded by corporates, backing half of the larger rounds in 2017 so far. Some of the biggest corporates involved in fintech funding include retail outlet Tengelmann, cable channel ProSieben, the venture capital arm of technology firm Intel and cloud computing company

Graph from Innovative Finance. 

Despite this growth, Europe has yet to see a venture capital-backed initial public offering and it doesn’t look like there will be one soon. Instead, investors will focus on M&A exits, the report says.

“The results of the joint Magister Advisors and Innovate Finance report reaffirm a robust and growing European FinTech ecosystem,” said Charlotte Crosswell, CEO of Innovate Finance. “Unlocking liquidity for FinTech M&A exits or IPOs will be a key issue in our ecosystem as FinTech enters its more mature phase.”

The report also found a strong interest in fintech B2B firms. Half of capital invested so far in 2017 has gone to B2B businesses, due to “regulation, increased collaboration and emerging technologies,” the report stated.

Victor Basta, founder and managing director of Magister Advisors, notes that these conditions mean high-value M&A exits are likely in the next few years.  

“The report clearly shows Fin-Tech in Europe is ‘growing up’ with a sharp increase in companies able to raise large rounds, and growing interest from a broad range of corporate investors,” he said. “Both trends set the stage for high-value M&A exits in the sector over the next few years.”

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