FinTech drives €12bn EU scale-up funding boom

UK tech scale-ups are competing with their German rivals to lead the ranking for late stage funding in 2019, with FinTech driving a surge in European funding deals over the last 12 months.

A report by Tech.EU and payments platform Stripe identified FinTech and software as the top industries for attracting scale-up funding rounds - so-called ‘mega funding rounds’- of €100 million or more in the first three quarters of 2019, with FinTech the top performing sector on €6.8 billion and software third on €3.1 billion.

On a country-by-country basis, Germany is currently leading the field with €8 billion of total EU tech funding deals across a number of sectors since the beginning of 2019, with the UK closing in on €7.5 billion.

Mega funding rounds for European tech firms totalled €12 billion, compared to €3 billion worth of mega funding rounds in 2016.

There has also been a marked increase in the number of funding deals for FinTechs in 2019, compared to previous years, with the last year accounting for 22 of the 34 rounds (65 per cent) either closed or announced since 2015.

The report stated that even before the end of the year, there were nearly five more late-stage funding rounds for European FinTech companies recorded than in full year 2018, and that is without Sonovate’s £110 million in debt and equity funding, and reports of upcoming mega funding rounds for other UK-based scale-ups such as Monzo and Revolut.

The increase in capital flowing to European scale-ups was largely to thank for the overall surge in tech funding to the continent in the first three quarters of 2019, with the number of rounds over €100 million increasing fourfold compared to 2016.

Across sectors, the report identified 52 late stage funding rounds in the first three quarters of this year, with mega rounds for European tech scale-ups such as Deliveroo (UK), N26 (Germany), Glovo (Spain), Doctolib (France), Klarna (Sweden) and OutSystems (Portugal) leading the boom in funding.

However, despite the surge in funding into Europe’s tech scale-ups, the report highlighted the fact that the majority of €100 million and above funding rounds between 2015 and 2019 were provided by investors, venture capital firms, hedge funds and big tech firms based outside of Europe.

Japan’s SoftBank fund alone is responsible for a massive influx of late-stage funding in Europe. Through its Vision Fund, it has pumped nearly €4 billion into European tech scale-ups from 2015 to the third quarter of 2019.

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