H1 Deep Dive on the Fintech Sector from the eyes of an international investor
We are proud to present the third installment in our series of industry deep dive reports, following our Digital Health and Communication and Collaboration reviews. In our Fintech Sector Report, we provide an overview of the evolution of Fintech into one of the most active startup sectors globally and identify the key players shaping this sector. We also present our views on the defining trends that will shape the emerging second wave of Fintech, as focus shifts from the unbundling of banks towards disrupting the financial services technology stack.
At White Star Capital, Fintech has been a key focus area for investment. Our portfolio includes startups such as Clark, the leading German insurance broker, Drop, an intelligent personalised rewards mobile app targeting millennials, TheGuarantors, an online risk management platform that provides lease guarantee for renters and helps landlords mitigate all tenant risks, Borrowell, a financial services marketplace offering personalized financial products and services including consumer loans, Uncapped, Europe’s first revenue based finance provider, and Aire, a platform that is automating the human underwriting process for lenders using machine learning through online interviews.
While Fintech is now a well established and highly sought after sector, we believe that we are still in the early innings in this space. New opportunities are arising with the development of core banking infrastructure and enabling technologies, powering companies’ offerings in adjacent markets such as e-Commerce and SaaS, as well as the specialisation of financial and insurance propositions to their target group’s needs. Some other highlights from our report include:
● Global fintech funding has grown at a 45% CAGR since 2011 as businesses and financial institutions innovate to serve growing financial expectations.
● The fintech ecosystem is maturing and later stage funding is stepping to the forefront in the US, China, UK and Germany. US and Latam have yielded 36 fintech unicorns, followed by Europe and Asia with 11 each, with the payments sector as an important contributor.
● Mega rounds, routine in the US and China, are a growing trend in Europe. Its status as a recognised fintech hub has attracted international investors seeking to deploy capital, with European valuations still c.35% lower than the US and China.
● An attractive market for exits, with 50% of exits in North America, Asia and Europe driven by strategic M&A, as incumbent financial services and e-commerce ecosystems embrace financial technology, as well as public markets IPOs from players such as Adyen, Bill.com and OneConnect.
Since its founding, White Star Capital has been investing into entrepreneurs pioneering change in both the consumer experience and the supporting infrastructure of fintech. As we enter the new decade, we are very excited to continue to invest in the sector’s most promising companies.
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About White Star Capital
White Star Capital is a global multi-stage technology investment platform that invests in exceptional entrepreneurs building ambitious, international businesses. Operating out of New York, London, Paris, Montreal, Tokyo, and Hong Kong, our presence, perspective, and people enable us to partner closely with our Founders to help them scale internationally from Series A onwards.