Fintech

Slowdown in fintech funding in Europe dampens mood at Amsterdam event

Published

8 months ago

8 June, 2024

Slowdown in fintech funding in Europe dampens mood at Amsterdam event

By Elizabeth Howcroft

AMSTERDAM (Reuters) – Europe’s fintech sector faces an uncertain future after funding crunches over the past two years scaled back pandemic-era ambitions and lofty valuations, but some are optimistic that rates lower interest rates will stimulate the recovery.

At the fintech conference in Amsterdam this week, the mood among delegates was mixed, although the speakers and organizers on stage were optimistic, particularly about the promise of artificial intelligence.

Damien Dugauquier, co-founder of iPiD, a Singapore-based fintech that offers prepayment validation services, said fundraising has been “considerably more difficult” in Europe than in the United States or Asia, which attributed to Europe’s weaker economic growth.

“I hope things change for Europe,” he told Reuters on the sidelines of the Money20/20 conference, where many of the exhibitors focused on cryptocurrencies or artificial intelligence.

Artificial intelligence was the buzzword at the start of the conference on Tuesday, with talks from some of Europe’s leading tech companies, including Mistral AI. There was an AI chatbot “co-host” being interviewed on stage, which didn’t work properly at first, and a mind-controlled beer pouring robot on display.

Fintech – or financial technology – companies have struggled since 2022 to raise the money needed to fund their operations after central banks raised rates to fight inflation, ending the era of free flow of liquidity.

Dugauquier, who recently closed a $5.3 million funding round, said: “It took eight months whereas I imagine two years ago it would have taken three months. So it’s getting better, but we’re definitely not going back to the crazy times.

For investors looking to gauge the state of the industry, the main areas of concern were companies’ valuations, their path to profitability in a European economy lagging behind the United States, and how they were handling growing regulatory scrutiny of the sector.

“To be honest, I don’t know if we’re at the end of the downturn in the cycle, because interest rates are still high,” said Helene Falchier, partner at fintech-focused venture capital firm Portage Ventures. It has assets under management worth $2.5 billion.

Venture capital funding flowing into fintech in Europe fell sharply last year to $9.2 billion in 2023 from $26 billion in 2022, PitchBook data shows.

There are few signs of fintech fundraising returning to pandemic-era highs, with funding volumes reaching just $4.4 billion in Europe by the end of May, data shows.

Portage Ventures’ Falchier said the company’s founders have learned lessons from the pandemic era and are more realistic about valuations, although deal flow is still affected by external events.

“We’re in this area where when there’s good news I think everyone is really excited and wants to get deals done,” Falchier said. But he also said the market is sensitive to bad news and geopolitical issues.

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Some delegates were more optimistic, noting that the Money20/20 event had grown rapidly compared to previous years.

Monica Long, president of US cryptocurrency firm Ripple, said people flying from the US to Amsterdam suggests fintech is doing well and booming in Europe.

“Cryptocurrency-related start-ups are doing better in Europe than in most countries. There are more cryptocurrency banks here in Europe than anywhere else,” he told Reuters in an interview.

While valuations have fallen across fintech sectors globally, executives at the conference said the outlook appears brighter for companies with proven profitability.

Kunal Jhanji, head of fintech and payments at Boston Consulting Group in the U.K., said in emailed comments that European companies’ valuations were not as “pushed up” as those of Asian and U.S. companies because they had less access to capital, and so they were “The corner on profitability has been quietly turning for some time.”

IPO activity and mergers and acquisitions should pick up next year as interest rates fall, he added.

British digital bank Monzo, which reported its first annual profit this week, secured £340 million of new funding in March in a round led by Alphabet, valuing it at £4 billion ($5.11 billion) , an increase from a round in 2021.

“What I know for sure is that there is enough interest in profitable companies… if unit economics are on your side, you will still be able to attract great valuations,” said Ani Sane, co-founder and chief business officer of payments company TerraPay in London.

TerraPay has raised more than $100 million in 2023 in equity and debt financing.

European companies have generally found it difficult to raise funds locally, sending them to the United States where capital markets are deeper, and prompting European governments to try to make it easier for startups to access finance.

Delegates also said expectations that fintech companies would disrupt traditional finance proved wrong.

“I remember when fintech was first described, there was a sense that fintech companies would be very disruptive to major institutions, potentially even capable of taking significant market share,” said Joanne Hannaford, who leads technology strategy at Deutsche Bank’s corporate bank.

“In reality that hasn’t actually materialized.”

($1 = 0.7821 pounds)

(Reporting by Elizabeth Howcroft; Editing by Tommy Reggiori Wilkes and Jane Merriman)

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Fintech

Lloyds and Nationwide invest in Scottish fintech AI Aveni

Published

6 months ago

29 July, 2024

FinCrypto Staff

Lloyds and Nationwide invest in Scottish AI fintech Aveni

Lloyds Banking Group and Nationwide have joined an £11m Series A funding round in Scottish artificial intelligence fintech Aveni.

The investment is led by Puma Private Equity with additional participation from Par Equity.

Aveni creates AI products specifically designed to streamline workflows in the financial services industry by analyzing documents and meetings across a range of operational functions, with a focus on financial advisory services and consumer compliance.

The cash injection will help fund the development of a new product, FinLLM, a large-scale language model created specifically for the financial sector in partnership with Lloyds and Nationwide.

Joseph Twigg, CEO of Aveni, explains: “The financial services industry doesn’t need AI models that can quote Shakespeare, it needs AI models that offer transparency, trust and, most importantly, fairness. The way to achieve this is to develop small, highly tuned language models, trained on financial services data, vetted by financial services experts for specific financial services use cases.

“FinLLM’s goal is to set a new standard for the controlled, responsible and ethical adoption of generative AI, outperforming all other generic models in our selected financial services use cases.”

Robin Scher, head of fintech investment at Lloyds Banking Group, says the development programme offers a “massive opportunity” for the financial services industry by streamlining operations and improving customer experience.

“We look forward to supporting Aveni’s growth as we invest in their vision of developing FinLLM together with partners. Our collaboration aims to establish Aveni as a forerunner in AI adoption in the industry, while maintaining a focus on responsible use and customer centricity,” he said.

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Fintech

Fairexpay: Risk consultancy White Matter Advisory acquires 90% stake in fintech Fairexpay

Published

6 months ago

29 July, 2024

FinCrypto Staff

Treasury Risk Consulting Firm White Matter Alert On Monday he announced the acquisition of a 90% stake in the fintech startup Fair payment for an undisclosed amount. The acquisition will help White Matter Advisory expand its portfolio in the area of cross-border remittance and fundraising services, a statement said. White Matter Advisory, which operates under the name SaveDesk (White Matter Advisory India Pvt Ltd), is engaged in the treasury risk advisory business. It oversees funds under management (FUM) totaling $8 billion, offering advisory services to a wide range of clients.

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White Matter Advisory, based in Bangalore, helps companies navigate the complexities of treasury and risk management.

Fairexpay, authorised by the Reserve Bank of India (RBI) under Cohort 2 of the Liberalised Remittance Scheme (LRS) Regulatory Sandbox, boasts features such as best-in-class exchange rates, 24-hour processing times and full security compliance.

“With this acquisition, White Matter Advisory will leverage Fairexpay’s advanced technology platform and regulatory approvals to enhance its services to its clients,” the release reads.

The integration of Fairexpay’s capabilities should provide White Matter Advisory with a competitive advantage in the cross-border remittance and fundraising market, he added.

The release also states that by integrating Fairexpay’s advanced technology, White Matter Advisory aims to offer seamless and convenient cross-border payment solutions, providing customers with secure options for international money transfers.

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Fintech

Rakuten Delays FinTech Business Reorganization to 2025

Published

6 months ago

29 July, 2024

FinCrypto Staff

Rakuten (Japan:4755) has released an update.

Rakuten Group, Inc. and Rakuten Bank, Ltd. announced a delay in the reorganization of Rakuten’s FinTech Business, moving the target date from October 2024 to January 2025. The delay is to allow for a more comprehensive review, taking into account regulatory, shareholder interests and the group’s optimal structure for growth. There are no anticipated changes to Rakuten Bank’s reorganization objectives, structure or listing status outside of the revised timeline.

For more insights on JP:4755 stock, check out TipRanks Stock Analysis Page.

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Fintech

White Matter Advisory Acquires 90% Stake in Fintech Startup Fairexpay

Published

6 months ago

29 July, 2024

FinCrypto Staff

White Matter Advisory Acquires 90% Stake in Fintech Startup Fairexpay

You are reading Entrepreneur India, an international franchise of Entrepreneur Media.

White Matter Advisory, which operates under the name SaveDesk in India, has announced that it is acquiring a 90% stake in fintech startup Fairexpay for an undisclosed amount.

This strategic move aims to strengthen White Matter Advisory’s portfolio in cross-border remittance and fundraising services.

By integrating Fairexpay’s advanced technology, White Matter Advisory aims to offer seamless and convenient cross-border payment solutions, providing customers with secure options for international money transfers.

White Matter Advisory, known for its treasury risk advisory services, manages funds under management (FUM) totaling USD 8 billion.

Founded by Bhaskar Saravana, Saurabh Jain, Kranthi Reddy and Piuesh Daga, White Matter Advisory helps companies effectively manage the complexities of treasury and risk management.

The SaveDesk platform offering includes a SaaS-based FX market data platform with real-time feeds for over 100 currencies, bank cost optimization services, customized treasury risk management solutions, and compliance guidance for the Foreign Exchange Management Act (FEMA) and other trade regulations.

Fairexpay is a global aggregation platform offering competitive currency exchange rates from numerous exchange partners worldwide. Catering to both private and corporate customers, Fairexpay provides seamless money transfer solutions for education, travel and immigration, as well as simplifying cross-border payments via API and white-label solutions for businesses. Key features include competitive currency exchange rates, 24-hour processing times, extensive currency coverage of over 30 currencies in more than 200 countries, and secure, RBI-compliant transactions.

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