Venture capitals seek out fintech investment
Fintechs attracted more funding from European venture capitals in the first quarter of this year, and are predicted to remain a core component of this ecosystem, a report has found.
Pitchbook’s European Venture Capital report has revealed that fintechs attracted €25.3m (£21.3m) across 1,358 deals from venture capitals during 2021, up from €8.6m from 980 deals in 2020. In the first quarter of this year alone, fintechs raised €7.9m from 286 deals.
The research found that fintech has emerged as a core venture capital subsector in Europe as several successful venture capital-backed companies have tackled longstanding challenges to streamline financial services.d
The report showed that new waves of fintech companies are developing across European ecosystems, and many received significant backing in the first quarter. It predicted fintechs to continue to compete for funding.
Read more: European fintech funding soared by 39pc in first quarter
Read more: European venture capital firms focus on fintechs
“We believe fintech will remain a core component of the evolving European venture capital ecosystem as competing businesses increasingly use machine learning, artificial intelligence, and proprietary technology to improve products and services for customer bases,” Pitchbook said in the report.
Pitchbook found that European venture capital funding started the year strong in the first quarter of the year, raising €27.5bn across 2,228 deals for start-ups to make it the second-biggest quarter on record in terms of capital invested.
The report said that if investments maintain their current pace, annual capital raised will surpass the €100bn mark for only the second time in the past decade with European venture capital deal value forecasted to hit a record €175bn this year.
Read more: IMF warns fintechs can pose challenges to regulators
The research said in the first quarter, the UK & Ireland accounted for over 30 per cent of the total venture capital invested in Europe while central and eastern Europe made up less than five per cent of total capital invested.
The report said the ongoing political turmoil with Russia could hinder long-term growth, particularly when it comes to foreign investors.