Chris Middleton reports on how FinTech companies are among the highest invested in Europe, while the UK is second only to the US in this sector. But there are worrying signs for British ambitions.

One sixth (16 percent) of the most venture-capital-backed tech startups in Europe are in financial technology (FinTech), according to a new report.

Market analysis firm CBInsights mapped the top-funded tech startups in each of 37 European countries, and found that while innovation hubs such as London, Berlin, and Stockholm hog the headlines, there are multimillion-dollar ventures in every nation.

Six FinTech companies are the most-funded tech startups in their respective countries. These are: payment solutions provider Klarna (Sweden, with $1.1 billion in funding raised); mobile banking platform N26 (Germany, with $638 million); smart payment platform Satispay (Italy, with $50 million); financial trading provider (Cyprus, with $25 million); financial digital transformation specialist FintechOS (Romania, with $16 million); and blockchain payments network Eligma (Slovenia, with $4.4 million).

Collectively, the number-one funded tech startups in each country (in any sector) have raised nearly $90 billion in disclosed equity funding. Eight of the 37 startups are unicorns (valued at $1 billion+), while the top companies in 16 countries have each raised over $100 million.

The most highly invested tech startup in any sector by country is UK satellite Internet provider OneWeb, with nearly $3.5 billion in disclosed equity funding.

UK leading in Europe

Had the CBInsights report focused on the European FinTech market specifically, the UK would have dominated the listings.

In 2019, UK startups won seven of the top 10 biggest FinTech deals: business lending company Greensill secured $800 million; competitor Oaknorth clinched $440 million; payments provider $230 million; business lender Iwoca $195 million; alternative lending platform Zopa $180 million; financial transfer provider WorldRemit $175 million; and Monzo bank $143 million.

According to a January 2020 report from, the UK smashed its FinTech investment record last year, notching up $4.9 billion in invested capital, up $1.3 billion year on year. This ranks the UK second behind the US for global VC investment in this sector.

According to Finextra, UK FinTech startups attracted more capital and completed more deals than the rest of the top 10 European countries combined. However the Klarna and N26 deals helped continental Europe hit $8.5 billion in 2019 VC investments, up nearly $3 billion year on year.

Globally, there were 86 FinTech megadeals (deals exceeding $100 million) in 2019, up 23 percent on 2018. Over half of these took place in North America.

The US easily dominates global FinTech investment, with $16.3 billion across 1,095 deals in 2019, up 23 percent year on year, according to Finextra’s figures. By contrast, FinTech investment in China slumped 93 percent, from $26 billion in 2018 to just $1.8 billion in 2019. Meanwhile, Indian FinTech investment hit $3.8 billion, ranking it number three in the world after the UK, spurred by Paytm’s $1.7 billion deal.

Brazil more than doubled its FinTech investments to reach $859 million, putting it sixth in the global rankings, with big wins by challenger bank Nubank ($400 million) and consumer lender Creditas ($230 million). Sweden also made the top ten, spurred by the Klarna deal and by the $63 million invested in open banking platform Tink.

UK concerns

There are two notes of caution for UK ambitions in FinTech, despite the country’s strong showing in 2019. First, the sector is consolidating fast, and second, London remains the epicentre of UK investment, receiving 88 percent of investments and 78 percent of all deals.

While this is no surprise, with the City being one of the world’s financial hubs, a November 2019 report from CBInsights found that the US FinTech industry is booming across 35 states – 70 percent of the country – rather than solely in technology hotspots like California and Texas, or in financial centres such as New York.

CBInsights listed the highest-backed startup in each of the 35 states where the US FinTech sector is booming – which the company defines as players receiving more than $5 million in equity funding. Collectively, those states’ number-one invested companies had raised over $9.5 billion.

It found that even the lowest invested of them – Indiana’ s Allied Payment Network – received backing of $6.6 million. Only three startups in the state-by-state list of biggest winners had raised less than $10 million.

In November 2019, the biggest-funded US FinTech startup by state was California’s personal finance platform SoFi, with a market valuation of $4.8 billion and $2.5 billion in disclosed equity funding. It was followed by New York-based health insurance player Oscar Health, with a valuation of $3.2 billion and $1.3 billion of investments.

Outside of these two familiar hotspots, there were six other unicorns among the top-funded companies by state: Ohio’s Root Insurance, valued at $3.6 billion (with $509 million in equity funding); Massachusetts’ Toast ($2.7 billion, with $503 million in investments); Illinois’ Avant ($1.9 billion, $655 million); North Carolina’s AvidXchange ($1.2 billion, $724 million); Georgia’s Kabbage ($1 billion, $490 million); and Kansas’ C2FO ($1 billion, $400 million).

The challenge for the UK, then, is obvious: number one FinTech player the US has succeeded in nurturing a multimillion-dollar industry across most of the country, while the UK’s burgeoning (if consolidating) sector is almost entirely based in the capital.

  • Other moves may threaten the UK’s status as a world financial centre. As previously reported on Transform Finance, announcements this year from UK Chancellor Sajid Javid – who was MD of Deutsche Bank before becoming an MP – and Foreign Secretary Dominic Raab have signalled that the UK intends to diverge from European rules and regulations.

Meanwhile, according to Bloomberg’s Brexit Impact Tracker, nearly $1 trillion in banks’ balance sheet assets have been moved out of the UK to Ireland and Germany since the 2016 referendum, with thousands of banking staff relocated.

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