A few days ago, the British fintech company SumUp, which manufactures small mobile bank card readers well known to artisans, announced that it had raised no less than €285 million. Is this a clearing in the cloudy weather?
The fintech company, however, did not specify what its valuation was. This, which had reached €8 billion after the previous round of funding in mid-2022, could be half as large today, according to specialized media.
Because times have changed. Since the last quarter of 2021, globally, “investments in fintech have halved and their valuations have fallen by two thirds”, observes Anton Ruddenklau, head of the fintech sector at KPMG, from Sydney.
Monetary tightening and global conflicts have been there. On a global scale, financing by venture capital funds, major sponsors of start-ups, fell by a third, from $683 billion in 2021 to less than $460 billion a year later. For fintech alone, funding fell by 40% over this period, from $92 to $55 billion, according to a recent report from McKinsey.
In 2023, the trend was the same, which we found in particular in France: according to the France FinTech professional association, these young shoots raised €939 million – up to mid-December – a figure down 70% over one year.
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Funds for the fintech sector
Faced with the scarcity of money, some have experienced major difficulties, such as the French online insurer Luko, which was unable to complete a new fundraising round: its future is now in the balance. hands of the commercial court. The German Allianz offered a few days ago the symbolic sum of… €4 to buy it back, even though it had been valued at more than €200 million at the height of its glory. .
In this context, “2024 is going to be a perfect storm, based on reduced liquidity and low valuations”, predicts Anton Ruddenklau of KPMG.
Qonto, a French neobank which claims 400,000 clients, with 1,300 employees in four markets in Europe, says it is open to new acquisitions in 2024.
“There is going to be consolidation, which is healthy and normal after a strong increase in the number of fintech companies created,” Alexandre Prot, its co-founder, comments to AFP. “We see ourselves as +consolidators+. We look, we want to find the right companies” to redeem, he said.
Some startups, due to lack of sufficient cash flow, are sometimes forced to make strategic choices, focusing on certain markets. Some are nevertheless embarking on a new fundraising campaign. This is the case of the German unicorn Solaris, 800 employees and €130 million in revenue in 2022, which, according to the Financial Times, would be in difficulty.
The company declines to comment. ‘If a company wants to raise capital, it needs a profitable business model and a strategy for the future. Two things that Solaris was able to demonstrate (…) As noted, we are currently working on our second fence” fundraising, nevertheless responds Konstantin Kavvadias, its financial director, in an email.
The manager even believes that the future remains promising. Because the money that flooded the financial markets has not disappeared, Christopher Schmitz, in charge of fintechs for EY, explains to AFP: “Private equity companies filled their funds in 2021 and 2022. There’s a lot of money, they’re just not spending it right now. However, there will come a time when they will have to invest it.”
Santa’s sack could therefore still be full for fintech companies, particularly those which offer services directly to traditional banks and insurance companies. “I have personally made five or six transactions in the last six months in this sector,” said Christopher Schmitz.
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