The mood music around European tech investment has changed drastically in the last six months, but for early-stage fintech investors things might be more positive.
Although VCs are investing more cautiously and public market turbulence has trickled down to lower valuations for late-stage private companies, further down the food chain seed and Series A rounds are proving resilient.
Sifted spoke with Europe’s most active early-stage fintech investors about what they’re seeing. Across the board, these investors mention seeing the slowdown hit early stages, but that high-performance companies are still able to raise competitive rounds. Several mention B2B as an area where they see opportunity. So who are they?
Most active early-stage fintech investors in Europe
Latest fund: N/A
Focus: London-HQ’d Seedrs is not a VC firm but an equity crowdfunding platform for private businesses that is supported by a big community of investors, from retail investors to active angel investors and funds. Since its launch in 2012, fintechs have taken the lion’s share of funding on the platform — 137 companies out of 776, according to Dealroom data.
European early-stage fintech investments in 2022: 13 — level with 13 in H1 2021
2022 EU fintech picks: CityFalcon, Income, Pennyworth Financial, Upside Technology, StonePay, GreenGrowth and Strabo.
Gender split of investment team: Although Seedrs doesn’t have your typical team of investors, it does have a 10-strong leadership which includes two women.
Notable investments: Revolut, Wombat and Plum have all raised rounds on Seedrs.
What the firm’s thinking: “What we’ve seen so far is that the appetite to invest in the first half of the year has remained strong and our data shows no significant downward trend equivalent to the start of the pandemic. Any decline we are seeing now is shallower than what is happening in the VC and public markets,” Jeff Lynn, Seedrs’ cofounder and executive chairman, tells Sifted.
“The investment trends we’re seeing are far more subtle as a result of constantly changing global socio-economic conditions playing on investors' minds. Among the things we are seeing, for fintech and other startups, is that investors are investing in fewer companies but are employing bigger tickets to those they choose to invest in. We are already seeing the average investment size up about 10%.”
2. Global Founders Capital
Latest fund: €150m (Mar 2013)
Focus: Berlin-HQ’d Global Founders Capital is the VC arm of German tech incubator Rocket Internet. It invests globally and is stage and sector agnostic — meaning it backs startups from seed to exit. Last year it was involved in 202 deals globally — 54 in Europe — according to Dealroom data, and it’s been busiest in the fintech sector.
While it’s continued on this trajectory in 2022, coming out on top for European fintech investment so far this year, it may be tightening its purse elsewhere. We’ve heard that it could be laying off up to 80% of its staff amid the current economic uncertainty. The firm has not responded to request for comment.
European early-stage fintech investments in 2022: Nine — up from six in H1 2021
Its 2022 EU fintech picks: Seyna, symmetrical.ai, Pillar, Dalma, Mistho, Cropsafe, Flitter, Fung, Tranch and Presail.
Gender split of investment team: The 24 team members listed on its website include just one female investment team member — partner Sarra Zayani, who is based in the US. GFC has no female investors in Europe.
Notable investments: GFC has backed some of the world’s biggest tech companies in the last decade, including Meta, Canva and Slack. Its European fintech portfolio includes Revolut, Billie, Uncapped and Tink.
What the firm’s thinking: “Generally we're seeing a slowdown in deal activity also at the early stages but we continue to be very bullish on the European fintech space,” partner Gerald Parloiu tells Sifted.
“Although most investors today will say that the bar is higher for founders to raise, there is still a lot of dry powder in the early-stage market. Many great companies were built in recessions, and I predict that the next wave of European fintechs will likely be founded by current fintech employees looking to bring novel solutions to existing challenges.”
3. Coinbase Ventures
Latest fund: N/A — it has no fixed fund size, as it’s a corporate venture fund, so its investments come from Coinbase’s balance sheet.
Focus: Launched in 2018, the venture arm of global crypto exchange giant Coinbase has no fixed fund size and no full-time employees. Coinbase Ventures writes cheques of between $50k and $250k and tends to go for rounds alongside other VCs, and not aim for board seats. While Coinbase announced plans to cut a fifth of its workforce last week, its venture arm has showed no sign of slowing down.
European early-stage fintech investments in 2022: Seven — up from four in H1 2021, according to Dealroom data. (Coinbase would not confirm these numbers.)
Its 2022 EU fintech picks: Qredo, Moralis, Composable Finance, Venly, WalletConnect, Merge and Mintbase.
Gender split of investment team: Data isn't available — but Coinbase Ventures’ president and COO is a woman, Emilie Choi.
Notable investments: FTX, OpenSea, BlockFi, Alchemy
What the firm’s thinking: Coinbase Ventures would not provide a comment on its current outlook.
Latest fund: $500m, announced last week, to back growth-stage companies to IPO
Focus: LocalGlobe has traditionally, of the four funds under the Phoenix Court Group umbrella, been the one that backs startups at pre-seed and seed. But as of last week, it’s got plenty of fresh cash to back startups through their full lifecycle — from pre-seed to public listing. The fund is sector agnostic.
European early-stage fintech investments in 2022: Eight — up from three in H1 2021
Gender split of investment team: 25% female in investment team overall, but 45% female at senior level. its partners are split three female to nine male.
Notable investments: Wise, TravelPerk, Monzo and Zego
What the firm’s thinking: “The next 18-24 months will be challenging but we still think that great companies will be built during this time and they still need capital and valuations will be much more reasonable than they were for the last 18 months,” says Remus Brett, general partner at Phoenix Court Group.
“From seed to Series A, even in the past few months, we continue to see strong companies raising great rounds. We take a 10-year view on the opportunity and given the access, insight and engagement that we have, we still believe the underlying fundamentals for fintech are strong.”
Latest fund: €80m (November 2021)
Focus: Despite being a generalist firm, Austria’s Speedinvest has developed a niche in fintech, where it’s ranked among the most active fintech investors in Europe for the last few years. Today, the fund has offices across Europe and focuses on fintech firms that cut across verticals. It predominantly focuses on B2B fintechs that have developed their own tech, and its investment picks in the last year have included Upvest, Yokoy, Airbank, Wayflyer and Billie.
European early-stage fintech investments in 2022: Seven — up from four in H1 2021.
Its 2022 EU fintech picks: Kevin, Airbank, Moove, Vitt, Molecule, Fiat Republic, Rollee.
Gender split of investment team: 29% female — 12 women, 30 men.
Notable investments: Wayflyer, Wefox, Bitpanda and GoStudent.
What the firm’s thinking: "The worsening funding environment has finally hit the early investment stages in fintech, resulting in fewer and smaller rounds. But Speedinvest continues to actively invest because, as a VC, we're in this for the long haul,” says partner Tom Lesche.
“Obviously founders want to make sure that they have enough cash in the bank to navigate the looming recession. This is why we're now seeing a lot of extension rounds under the new mantra 'flat rounds are the new up rounds'."
6. Plug and Play
Latest fund: $25.5m (April 2022)
Focus: Founded in 2006 in California, Plug and Play has both an accelerator programme and a VC arm. Currently operating across 15 countries, it expanded into London in 2019. Plug and Play typically invests $50k-250k in pre-seed, seed and Series A startups, primarily B2B.
European early-stage fintech investments in 2022: Seven — up from four in H1 2021.
Its 2022 EU fintech picks: Venly, Helios, Redkik, Connect Earth, Atem, DriveX and Sibill.
Gender split of investment team: 60% male, 40% female venture employees in EMEA
Notable investments: Lending Club, N26 and PayPal.
What the firm’s thinking: "Valuations in the growth and late stages in Europe are being slashed and the effect is trickling down to the early stage. However, we are confident that great founders and businesses will still be funded at a more sensible valuation,” says Kieran Borrett, head of Plug and Play UK.
“Valuations in fintech have been blown out of proportion in recent years. Now, investors are seeking more for early signs of traction and market validation. It’s a great time to re-evaluate the existing investment theses and build even more conviction.”
Latest fund: £78m (November 2020)
Focus: Founded in 2007, London-based Seedcamp invests at pre-seed and seed across sectors. It backed Wise and Revolut — two of Europe’s shiniest fintechs.
European early-stage fintech investments in 2022: Six investments — up from five in H1 2021
Its 2022 EU fintech picks: Weavr, Yonder, Gaia, Fiat Republic, FUEL and Koia.
Gender split of investment team: Four men, three women
Notable investments: Revolut, WeFox, TransferWise and Monese.
What the firm’s thinking: "We continue to be very excited about opportunities across fintech as we see strong talents leaving the likes of Pleo, iZettle, Spendesk, Revolut, etc., launching their own companies,” says partner Sia Houchangnia.
“More specifically, we believe there are still plenty of opportunities on the B2B front with API-driven businesses that consolidate an increasingly fragmented financial stack."
8. Force Over Mass
Latest fund: €103m (February 2021)
Focus: Founded in 2013, London-based Force Over Mass focuses on early-stage investments into UK startups across sectors, but SaaS and fintech take the lion’s share of its portfolio. Since then, it’s backed 90+ startups, including 24 fintechs.
European early-stage fintech investments in 2022: Six — up from three in H1 2021.
2022 EU fintech picks: Artificial Labs, Outfund, Banked, Payflow, Banxware and in3.
Gender split of investment team: 87.5% male, 12.5% female
Notable investments: Payflow, Artificial Labs and Outfund.
What the firm’s thinking: “Even with some of the froth coming off the market, fintech is still very attractive,” says partner Wouter Volckaert.
“What’s exciting is that we’re still so early. Penetration rates are still very low and so many markets remain untouched. One example would be B2B payments. We’ve seen huge successes with B2C payments companies like Stripe and Adyen, but the B2B payments market is 4x larger and we really haven’t seen much innovation there yet.
“Earned wage access is another — with many companies struggling to hire and retain their employees, who need to manage their finances. These areas will only become more important. If you have high inflation and central banks can’t tame it using interest rates, then innovation is the only way to get it under control.”
A note on methodology
We worked with Dealroom to compile this data, ranking investors by the number of Seed to Series A European fintechs they had backed in the first six months of 2022.
All VC firms confirmed the data to Sifted, apart from Coinbase Ventures, which would not specify.
Amy O’Brien is Sifted’s fintech reporter. She authors Sifted’s fintech newsletter and tweets from @Amy_EOBrien.