VC investment into European fintech set to enjoy stellar 2022

The data from PitchBook shows that VC investment in the UK and Ireland continues to enjoy a purple patch, outpacing other European countries this year and that VC investment into European fintechs has enjoyed a strong start to 2022.

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Fintech will remain a core part of the European VC investment landscape in the future, according to a leading investment analysis firm, whose data shows that 2022 could match 2021’s record year for the number of VC fintech deals across the continent.

The data from PitchBook also shows that VC investment in the UK and Ireland continues to enjoy a purple patch, outpacing other European countries this year.

VC funding into the UK and Ireland came in at €8.4bn between January and March 2022, more than 30 per cent of total European investment, the data shows

The UK’s figures were helped by London-based Checkout.com completing a €884m round at a €34.5bn valuation in Q1. 

Across Europe, the value of VC deals in 2022 has begun with “strong momentum”, despite interest rate hikes, economic uncertainty caused by Ukraine, and the  impact of the pandemic, the report found.

The report also highlights “new waves” of fintechs in Europe, many of which received funding in Q1 of this year.

Examples include France-based business account supplier Qonto, which bagged €486m at a €3.9bn pre-money valuation; Italy-based buy now, pay later provider Scalapay, which received €438.9m at a €695m valuation; and Denmark-based bank Lunar, which completed a €280m round at a €1.7bn valuation. 

EU passporting rights helped fintechs and other financial service firms “scale rapidly” while the increasing power of “platformification” of financial services across Europe has led to opportunities in e-commerce, banking, cryptocurrencies, blockchain, foreign exchange, and investing, the report says.

“We believe fintech will remain a core component of the evolving European VC ecosystem as competing businesses increasingly use machine learning (ML), artificial intelligence (AI), and proprietary technology to improve products and services for customer bases,” the PitchBook report says.

2021 marked a stellar year for VC funding into European fintechs with 1,358 deals with an overall deal value of €25.3bn across Europe.

But the early data shows that 2022 could match or even eclipse 2021.

In 2022, there have been 286 VC funded fintech deals with an overall value of €7.9bn up until the end of March across the continent.

Kevin Chong, co-head of Outward VC, a LondonLondon-based venture capital firm that invests in early-stage UK fintech startups, told AltFi that VCs are looking to invest in fintechs which can operate globally.

He said: “I think people are going to be looking for businesses that are addressing global opportunities. 

He referenced PirmariyBid, which Outward VC has invested in and which earlier this year bagged a $190m investment, as a kind of template for a company that has global appeal.

He said PimraryBid “is as relevant in Europe as it is in the Middle East as it is in Asia, as it is in the US”.

He also thinks VC investors will swing away from investing in B2C to B2B fintechs.

He said: “We have had a lot of B2C success stories obviously with the neobanks over the years. But people are now waiting to see how they develop. 

“A lot of money has gone into growing those B2Cs and I think people are waiting to see if they get their business models sorted out.”

He pinpointed B2B sectors like re-insurance which have not been disrupted but present a huge opportunity for investors.