Could This $350 Million VC Fund Position Europe as a Fintech Leader? Investment throughout European fintech firms accelerated in 2021, with 750 financial deals recorded across the continent last year.
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur Europe, an international franchise of Entrepreneur Media.
London-based asset manager, Fasanara, has unveiled a $350 million VC fund geared toward fostering emerging fintechs and cryptocurrency ventures. The firm has a rich history of backing high-potential tech firms, and now its new fund has the potential to further solidify Europe's position as a fintech leader.
In the past, Fasanara has raised around $550 million across two venture funds in order to support flexible payment firms Scalapay and Grover. Now, the firm's VC fund is intent on scouting out the next generation of European leaders in the world of digital lending and digital assets - including the likes of cryptocurrency - and providing them with a platform to flourish.
As Crunchbase data shows, Europe's fintech ecosystem is growing at a considerable pace. Whilst Revolut has positioned itself as a market leader among global neobanks, Klarna has rocketed to a $45.5 billion valuation as its buy-now-pay-later business model finds a huge audience as shoppers look to buy products via credit.
Investment throughout European fintech firms accelerated in 2021, with 750 financial deals recorded across the continent last year, amounting to a total of €26 billion. Furthermore, four fintechs populated the top 10 most valuable tech firms in Europe in 2021. European VCs invested a record-breaking $2.2 billion into emerging financial technology like cryptocurrency and DeFi projects in 2021 -- underlining the enthusiasm flooding into the industry.
As for Fasanara Capital, the firm has provided funding for 29 companies at Series A throughout Europe over the past three years of VC investing as the platform banks big on the development of fintech throughout the continent.
"The European asset management industry is on the brink of a huge tech-led transformation and we have been at the forefront of this change, both as a digital lender and trader of alternative assets. Over the past eleven years we have developed a deep understanding of the fintech ecosystem, have financed more than $30 billion of digital loans and receivables," said Francesco Filia, CEO of Fasanara Capital.
Europe's burgeoning fintech landscape.
Fasanara's VC funding push comes as Europe's network of leading fintechs becomes even stronger, following the announcement of London fintech Yapily's agreement with SCHUFA to acquire finAPI, a firm that's the leading supplier of open banking solutions in Germany today.
The deal, which was announced in early May, has converted Yapily into one of the biggest open banking payments platforms in Europe. In the past year, both Yapily and SCHUFA paved the way for customers to process a combined total of $39.5 billion in payment volumes.
Yapily's acquisition of finAPI will double the firm's customer base, not only through the onboarding of new individual customers but also more than 50 large-scale enterprises emanating from the financial, insurance, and IT industries.
At present, Yapily has coverage over 16 European nations, but the acquisition will enable the leading fintech to dip its toes into Czech, Slovakian, and Hungarian markets, too - helping to strengthen its position within Europe.
The acquisition will carry key benefits for finAPI customers too, who will gain access to pan-European markets with greater levels of resources. Furthermore, German credit bureau, SCHUFA, will continue to work alongside the open banking firm both in supporting its existing products and services as well as future development opportunities.
"This is a hugely exciting milestone for Yapily on our journey from disruptive start-up to ambitious scale-up, said Stefano Vaccino, founder and CEO of Yapily. "Within three years from launch, we have commercialised our platform, grown our customer base, and now have the largest open banking payments volumes in Europe."
"Working with finAPI, we can gain more speed, agility, and depth to accelerate innovation and shape the future of open finance in Europe and beyond."
Yapily's acquisition of finAPI points to an ever-maturing network of European fintech firms that are uniting across borders to create open banking solutions that can serve the entirety of the continent.
Although the fintech outlook looks rosy for Europe as open banking solutions continue to grow in stature, the continent's leading neo-banking firms will need to navigate an altogether more volatile economic climate than fintech's breakout years in 2020 and 2021.
Due to complications arising from Covid-19, the emergence of record-breaking inflation rates, and the flare-up of geopolitical tensions in Eastern Europe, fintech firms are struggling to find a viable solution in going public
For instance, the hotly anticipated IPO of US-based fintech firm, Stripe, has been thrown into doubt as downturns threaten to lower the company's valuation upon its Wall Street arrival.
"Strong volatility has temporarily halted market placements," warned Maxim Manturov, head of investment advice at Freedom Finance Europe. "As for Stripe, its offering is still expected in 2022. That being said, amid weakness in the fintech company sector, Stripe could come in below its latest $95bn investor price, with one shareholder, Fidelity. For example, adjusting the value of its investment in Stripe by 9% following a sell-off in the tech company market."
The coming months may present themselves as a testing period for Europe's growing fintech sector, and we may see some frugality from firms unsure about whether to continue with their scaling ambitions amidst the uncertainty. However, with the faith and financial backing of asset managers like Fasanara, these global downturns can be an opportune moment for the brightest of Europe's fintech firms to stake a claim on the world stage.
Although the results may not be immediately given the uncertain climate, there's plenty of reason for Europe to be optimistic about its fintech future.