European Funding Trends: Soaring Wealthtech and Insurtech Funding

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European Funding Trends: Soaring Wealthtech and Insurtech Funding

Switzerland

News / Switzerland 144 Views 0

In Q2 2021, European fintech companies raised a record of US$7.2 billion in venture capital (VC) funding, a 30% quarter on quarter (QoQ) surge driven by insurtech and wealthtech companies, according to new data from CB Insights.

Among all fintech segments, insurtech and wealthtech recorded the biggest funding gains QoQ. Insurtech companies raised a record of US$1.8 billion, up over 400% QoQ, while wealthtech companies raised US$1.3 billion, up 273% QoQ.

QoQ funding and deal growth, overall and by sector, Q1’21 – Q2’21, Source: Fintech Funding Trends in Europe, CB Insights, Sep 2021

QoQ funding and deal growth, overall and by sector, Q1’21 – Q2’21, Source: Fintech Funding Trends in Europe, CB Insights, Sep 2021

The five largest insurtech deals of Q2 2021 totaled US$1.5 billion, and included WeFox (US$650 million, Germany), Bought By Many (US$350 million, France), Alan (US$222.6 million, France), Shift Technology’s (US$220 million, France), and FintechOS (US$60 million, Romania).

Deals and equity funding ($M) to insurance tech companies, Q2’20 – Q2’21, Source: Fintech Funding Trends in Europe, CB Insights, Sep 2021

Deals and equity funding ($M) to insurance tech companies, Q2’20 – Q2’21, Source: Fintech Funding Trends in Europe, CB Insights, Sep 2021

In wealthtech, the top five largest funding rounds of Q2 2021 raised a total of US$1.2 billion. They included Trade Republic, a German neobroker (US$900 million), Scalable Capital, another German startup providing digital wealth services (US$183 million), Bux, a Dutch community-based trading app (US$80.49 million), Tesseract, a Finnish digital asset management platform (US$25 million), and Epsor, a French human resources (HR) tool allowing users to manage payroll and employee savings (US$24.5 million).

Deals and equity funding ($M) to wealth tech companies, Q2’20 – Q2’21, Source: Fintech Funding Trends in Europe, CB Insights, Sep 2021

Deals and equity funding ($M) to wealth tech companies, Q2’20 – Q2’21, Source: Fintech Funding Trends in Europe, CB Insights, Sep 2021

The capital markets segment recorded the third biggest funding gain QoQ, jumping ­75% to US$552 million in Q2 2021. Open banking and banking platforms took most of the top deals with notable rounds that included 10x Future Technologies, a UK bank infrastructure provider (US$187 million), Mambu, a German software-as-a-service (SaaS) banking platform (US$134.9 million), and Tink, a Swedish open banking software (US$103 million).

Deals and equity funding ($M) to capital markets tech companies, Q2’20 – Q2’21, Source: Fintech Funding Trends in Europe, CB Insights, Sep 2021

Deals and equity funding ($M) to capital markets tech companies, Q2’20 – Q2’21, Source: Fintech Funding Trends in Europe, CB Insights, Sep 2021

At the end of the spectrum, real estate companies saw the biggest decline, falling 87% in funding QoQ to US$80 million. Payments companies also took a hit, declining 38% to US$1.5 billion.

Blockbuster year for fintech funding

Funding to European fintech companies in H1 2021 totaled a record-breaking US$12.8 billion, nearly 1.5x higher than 2020’s full-year total. Deal count fell 8% QoQ while funding grew 30%, indicating that those fundraisings went towards mid- to late-stage rounds.

Quarterly VC-backed, Europe-based fintech funding ($M), Q3’17 – Q2’21, Source: Fintech Funding Trends in Europe, CB Insights, Sep 2021

Quarterly VC-backed, Europe-based fintech funding ($M), Q3’17 – Q2’21, Source: Fintech Funding Trends in Europe, CB Insights, Sep 2021

Germany raised some of the region’s largest deals of Q2 2021, nearly reaching UK’s funding high among European countries. In Q2 2021, German fintech companies raised US$2,031 million, only 2% more than their UK counterparts (US$2,069 million).

Quarterly VC-backed, Europe-based fintech deals and funding ($M), Q3’17 – Q2’21, Source: Fintech Funding Trends in Europe, CB Insights, Sep 2021

Quarterly VC-backed, Europe-based fintech deals and funding ($M), Q3’17 – Q2’21, Source: Fintech Funding Trends in Europe, CB Insights, Sep 2021

2021 has been a blockbuster year for fintech funding and startup valuation in Europe. The continent started the year with just one decacorn fintech startup worth US$10 billion or more – buy now, pay later (BNPL) giant Klarna that’s worth US$45.6 billion, according to CB Insights data – but since then, two new decacorns have been minted: digital bank Revolut, and digital payment specialist Checkout.com, worth US$33 billion and US$15 billion, respectively.

Europe’s 39 fintech unicorns have collectively raised US$22.6 billion to date, Crunchbase data show, and are altogether valued at US$178 billion. This means that about half of that capital was raised this year alone. Close to half of Europe’s fintech unicorns reached the status in 2021, among which Trade Republic, London-based challenger bank Starling Bank, health insurance platform Alan, and Danish employee smart card company Pleo.

Crunchbase data show that Index Ventures, Seedcamp and Accel have the highest investment count in European fintech unicorns. Seedcamp has the highest portfolio count at the seed stage, while Valar Ventures and Index Ventures mainly get in at Series A rounds.

Active investors in European fintech unicorns and exited unicorns by investment counts, Source- Crunchbase, Aug 2021

Active investors in European fintech unicorns and exited unicorns by investment counts, Source: Crunchbase, Aug 2021

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