Late-stage FinTech funding has increased in European and the UK, with corporates backing nearly half the deals in 2017
A report by Magister Advisors and Innovate Finance shows that capital invested into $20 million + rounds have increased at a compound annual growth rate of 75% since 2013
19 September 2017
LONDON – Findings from the joint report, The State of European FinTech: Current trends and predictions, released during the inaugural Innovate Finance FinTech Growth Forum in London reveal a strengthening FinTech landscape.
While the number of investment rounds exceeding $20 million have increased in Europe, increased investor interest has pushed valuations higher, with multiples often significantly above publicly traded established players.
Average deal size has been trending upwards since 2012 – the only notable exception being in 2016, which could be explained by the EU referendum (Brexit) vote in the UK.
Europe has yet to see a venture capital-backed initial public offering (IPO). Multiple factors point to future increase in mergers and acquisition (M&A) activity. The report argues that because capital invested into FinTech will require a path to liquidity, private investors will continue focusing on M&A exits until public investors show appetite for FinTech IPOs.
There also has been a sharp increase in corporate interest and investment in FinTech. Late-stage FinTech are increasingly being funded by corporates; they participate in nearly half of larger FinTech rounds in 2017.
Some of the most active corporate investors in European FinTech, which have core businesses outside of financial services include Tengelmann, ProSieben (Seven Ventures), Intel Capital, Salesforce.com.
Investment into FinTech business-to-business (B2B) companies has increased. In 2017, nearly half of the capital invested in FinTech has gone to B2B. This is due to many factors, including regulation, increased collaboration and emerging technologies.
“The results of the joint Magister Advisors and Innovate Finance report reaffirm a robust and growing European FinTech ecosystem,” says 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 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. Both trends set the stage for high-value M&A exits in the sector over the next few years” noted Victor Basta, Founder & Managing Director of Magister Advisors.