Impressive as this figure may seem, and it is, it is none the less a significant decrease on $40.8 billion raised in 2018. This should not be taken as an indication that the fintech revolution is slowing down, because it certainly isn’t, but it is an indication that investors are being choosy. There has been an over proliferation of fintech start-ups and in 2019 early stage start-up funding hit a five-year low. By contrast, funding for Series B start-ups hit a five-year high. The clear message is that the pack is thinning out and investors are seeking out those companies which have already demonstrated their importance to the market.
The UK continues to lead Europe in fintech development, with over 1600 businesses currently operating, a figure which is predicted to more than double by 2030. London is a European fintech hub, with the highest concentration of financial and professional service firms in the world. It’s hardly surprising then that London leads European tech investment by a substantial margin and despite the reduction in investment, fintech companies in the UK are still securing substantial investment. For example, Soldo, who offer prepaid cards for businesses, secured $61 million in Series B investment last summer, bringing the total amount raised by this London based start-up to $82 million. Founder, Carlo Gualandri says the biggest challenge has been educating the market. ‘When you don’t even know a problem exists, you don’t even call it a problem, but you consider it just a fact of life.’ Rimilia, another London based start-up, which specialises in Financial Relationship Management, an AI based system which unifies pre and post-sale customer data into a seamless management system, secured an additional $15million in funding, bringing its total funding to $40 million.
Asia outpaced Europe in the level of fintech funding secured during the second half of last year despite a reduction in fintech funding by China. Again, this is in response to an over-proliferation of fintech companies in China and tight regulatory controls, designed to curb the rampant cyber-fraud which has grown up alongside China’s fintech development. Despite this slow down in fintech development, it is likely that China will continue to lead the world in fintech development. China and Hong Kong are home to 18 of the world’s leading fintech unicorns, with an average value of over $26 billion.
The new kid on the fintech block is India, which now exceeds China in its fintech funding. Although Indian fintech is still in its infancy and internet coverage across the country is patchy, Indian fintech start-ups are starting to attract the attention of American investors. The Indian fintech start-up PhoneParLoan, literally loan by phone, is typical of fintech start-ups which cater to the needs of the population. PhoneParLoan, which recently secured an undisclosed sum of US venture capital, specialises in short term micro loans arranged by phone. Many Indian workers find themselves short of money at the end of the month and PhoneParLoan provides them with loans of between 1000 to 10,000 rupees ($14-$140).
Founder Dinis Guarda
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