The economic bounce-back from 2020 continues apace in the financial technology sector, judging by investors’ behaviour. In the first half of 2021, funding to Europe-based FinTech companies surpassed the full-year total for 2020.
That’s according to technology and investment analysts CB Insights, whose latest report finds that European FinTechs raised $12.8 billion to the end of June, over one and a half times more than all last year.
European Q2 deal numbers fell by eight percent sequentially, but investments grew by 30 percent to hit a quarterly record of $7.2 billion, driven by mega-rounds.
This is further evidence of the industry consolidating via mid- to late-stage investments rather than early, more speculative bets.
Changes wrought by the pandemic are visible in investors’ shifts in focus: insurance and wealth management technology companies led growth in Q2, with InsurTech funding growing by 403 percent quarter on quarter, and WealthTech by 272 percent. Capital markets funding grew by 70 percent in the quarter.
By contrast, funding of real-estate related FinTech fell by 87 percent quarter on quarter, while payments technology fell by 38 percent.
In terms of the number of deals, however, InsurTech grew by just eight percent against the previous quarter and WealthTech by nine percent. By contrast, banking deal numbers soared by 70 percent, digital lending by 64 percent, and SMB FinTech by 46 percent. However, it is clear where the big money is headed.
There was troubling news for Brexit Britain in emerging trends. Although UK FinTechs still lead their competitors in Europe, with Britain second only to the US in hothousing FinTech innovators, Germany-based companies nearly matched the UK’s funding total in Q2.
UK FinTechs raised an impressive $2.1 billion, but this was only two percent more than rivals in Germany, which clinched two of the top five biggest deals in both H1 and Q2: Trade Republic ($900 million in Series C) and wefox ($650 million in Series C). The biggest individual deal was $1 billion in growth equity for Sweden’s Klarna.
The UK bagged the fifth-largest deal in Q2, with $500 million Series C funding for SaltPay, but did not make the top five for the first two quarters combined. H1 was dominated by Germany and Sweden (two placings apiece), with the Netherlands on one ($800 million in Series C funding for online payments provider Mollie).
In terms of overall FinTech funding in H1, France, the Netherlands, and Sweden make up the top five, behind the UK and Germany.