European fintech funding booming but could be set to stall

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European fintech funding booming but could be set to stall

European fintech funding rebounded from its pandemic lull in the first half of 2021, according to a Finch Capital report which nevertheless warns that the boom could stall again next year.

European fintech financing hit EUR15 billion in the first half, up from just EUR5 billion in the second half of 2020, says Finch, with B2B businesses dominating, securing 65% of the capital.

However, Europe is the least diversified region, with five per cent of the deals seeing over 65% of the funding amounts, as giant unicorns such as Klarna and Rapyd dominate.

Finch predicts that the fintech blast could stall next year, citing four factors: a war for talent that will increase costs; a slowdown in public and IPO markets; increased regulatory scrutiny; and rising interest rates.

Radboud Vlaar, managing partner, Finch Capital, says: “We expect the market environment for fintech in 2022 to be a bit circumspect, with early signs of structural events that could stall the amazing ride of the last 8-10 years.”

Separately, CB Insights has published its latest fintech report, which shows global funding has hit $91.5 billion so far this year, nearly double the capital raised in the whole of 2020.

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