A return to ‘investment discipline’ has seen the level of funding for European fintechs drop by 70% within the last year.
A report from UK-based investment firm Finch Capital shows that fintechs based in Europe raised €4.6 billion in the first half of 2023, compared to the €15.3 billion raised during the same period in 2022.
The number of deals also reduced by close to half during that period- from 884 to 463. And while there was only a slight decline in the number of M&A transactions (5%), the value of these transactions fell by 84%.
According to Finch Capital, the main reason for this reduction in funding is a renewed emphasis on investment discipline and profitability, which has also led to more lay-offs.
According to Radboud Vlaar, managing partner, Finch Capital, this trend will “continue to be painful for the next 12 months, but will result in a more healthy and sustainable start-up, hiring and investor ecosystem”.
© 2023 fundsTech