Joint article written by Wolfgang Menig, Partner at Herax Partners
Alexander Khourdaji, Analyst at Herax Partners
Guy Morgan, Partner at Fox Williams LLP
The Funding Position
In 2017, approximately $31 billion was invested into FinTech businesses globally, of which the US accounted for almost half, at $15.2 billion. This is more than double the $7.4 billion invested in European FinTechs, and over six times the $1.2 billion invested in German FinTechs.
The large gap between the US and Europe is partly driven by the size of the respective markets, and the deeper funding ecosystem that exists in Silicon Valley and New York. At the early stages, when venture capitalists start investing in FinTechs, US FinTechs are already about five times larger than in Europe ($86 billion and $14.5 billion respectively). By the time the VCs exit, the gap hasn’t closed by that much. By then US FinTechs are still three times bigger than their European peers ($200 million vs $70 million respectively).
A similar discrepancy exists within Europe, partly on account of London’s status as the leading FinTech hub in Europe. According to KPMG, in Q4 2017, European investments in FinTech exceeded $2 billion, over 80% of which was accounted for by UK businesses. German FinTech investment, by contrast, only accounted for 7%.
You can read the full joint article here.