Europe’s fintech industry faces an uncertain future after financial constraints over the previous two years lowered pandemic-era expectations and valuations, but some hope lower interest rates will revive it.
Even if presenters and organizers at a fintech conference in Amsterdam this week were positive about artificial intelligence, the mood was divided.
Damien Dugauquier, co-founder of Singapore-based pre-payment validation fintech iPiD, said Europe’s slower economic growth made funding “considerably harder” than in the US or Asia.
Since 2022, when central banks hiked interest rates to fight inflation, fintech startups have struggled to raise capital.
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We may not be at the bottom of the cycle yet because interest rates are still high. “Portage Ventures partner Helene Falchier handles $2.5 billion in fintech-focused venture capital.
PitchBook data shows that European fintech venture capital funding declined from $26 billion in 2022 to $9.2 billion in 2023.
By the end of May, European fintech funding deal volumes reached $4.4 billion, showing little evidence of recovering to epidemic levels.
Falchier of Portage Ventures said company owners had learned from the epidemic and were more realistic about values, but external forces still affected dealflow.
“We are in this area where, when there is good news, I think everyone is really excited and wants to move deals,” he said. She also warned that unfavorable news and geopolitical events could hurt the market.
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Positive participants noted that Money20/20 has grown greatly in previous years.
Monica Long, president of Ripple, said Americans flying to Amsterdam showed that fintech is growing in Europe.
“European crypto startups perform better. Europe has more cryptocurrency banks than anywhere else, she told Reuters.
Executives at the conference said profitable fintech companies had a stronger future despite global value declines.
He expected IPO and M&A activity to rise next year as interest rates declined.
This week, the British digital bank Monzo reported its first annual profit. In March, Alphabet led a fundraising round that raised 340 million pounds, valuing the company at 4 billion pounds ($5.11 billion), an increase from 2021.
“I know there is enough appetite for profitable companies. If unit economics favor you, you can still command high values, “TerraPay co-founder and CBO Ani Sane stated.
TerraPay raised over $100 million in loans and equity in 2023.
European companies have struggled to raise financing domestically, sending many to the US, where capital markets are more developed, and prompting European governments to make it easier for start-ups to get funding.
