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European Fintech Funding Declines in H1 2023, Emphasizing Profitability and Investment Discipline

FinTechEuropean Fintech Funding Declines in H1 2023, Emphasizing Profitability and Investment Discipline

A report by Finch Capital reveals that European fintech funding significantly declined in the first half of 2023 as the sector grappled with a renewed focus on investment discipline and profitability. Key findings from the report include:

  1. European fintechs raised €4.6 billion in H1 2023 across 463 deals, a substantial drop from €15.3 billion from 884 deals in H1 2022.
  2. In 2021 and 2022, the top 20 funding rounds in Europe accounted for 50% of the market, but they now represent over 60% of the total deal volume while decreasing in size. Seed rounds continued to attract funding, but Series A to C companies faced more significant challenges.
  3. M&A activity experienced only a 5% decline, indicating an appetite for deals at the right prices. However, transaction sizes decreased by 84%.
  4. Public markets remained largely closed due to low valuations.
  5. The pursuit of profitability became a central focus, leading to over 3,000 layoffs in the industry. Despite this, the sector continued to hire, with the ten fastest-growing fintech companies adding over 1,050 employees in the past year.
  6. The UK demonstrated more resilience than some other European countries, accounting for over 50% of the funding in Europe. Regions such as the Nordics, Poland, France, and the Nordics held up well, particularly through larger crypto funding rounds.

 

By FCCT Editorial Team

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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