Fintech Conference Shows Mixed Sentiments Amid Uneven Growth

What’s going on here?

The recent fintech conference, Money20/20, held in Amsterdam, highlighted a mixed climate among attendees, with a significant focus on artificial intelligence (AI) and cryptocurrencies.

What does this mean?

Fintech is navigating troubled waters in Europe. Damien Dugauquier, co-founder of iPiD, pointed out that fundraising has become more difficult due to weaker economic growth compared to the United States and Asia. Venture capital funding in Europe slumped to $9.2 billion in 2023 from $26 billion in 2022, and by May 2024 deals had reached just $4.4 billion. Despite these obstacles, companies are adapting, focusing on profitability. For example, Monzo celebrated its first annual edition

profit

and secured £340 million ($511 million) in March, led by Alphabet. Similarly, TerraPay raised over $100 million last year through equity and debt financings.

Why should I care?

For markets: Funding struggles continue.

European fintechs are increasingly looking to US markets as they face difficulties raising capital locally. European governments are working to improve access to local finance, but until then the funding gap may persist. With $2.5 billion in assets, Portage Ventures noted that market sensitivity is heavily influenced by news and geopolitical events.

The bigger picture: A shift in focus.

European fintechs are moving towards profitability due to limited access to capital. BCG’s Kunal Jhanji observed this

trend

with companies like iPiD now taking significantly longer to close funding rounds: eight months for a recent $5.3 million round compared to just three months two years ago.

Source