EMEA

Fintech investment in EMEA drops to $11.4 billion in H1’24

The EMEA region saw total fintech investment drop considerably in the first half of 2024, falling from $19.1 billion in H2’23 to just $11.4 billion in H1’24 amid continued geopolitical uncertainty and a high interest rate environment that kept interest in large deals quite muted. The UK saw the largest share of fintech funding in the region during H1’24, attracting $7.3 billion in investment, including the $4 billion buyout of financial software company IRIS Software Group by Leonard Green, a $999 million VC round by small business focused marketplace platform Abound, and a $621 million raise by neobank Monzo. The largest deals outside of the UK included the buyout of payments firm Banco BPM Gruppo for $652 million and the acquisition of Switzerland based e-invoicing company Pagero by Thomson Reuters.¹

Key H1’24 highlights from the EMEA region include:

VC funding shows some resilience: Compared to other regions, fintech-focused VC investment in the EMEA region showed resilience in H1’24, with $5.4 billion in investment. This resilience was likely helped by small increases in VC investment in the UK, Germany, Nordics region, and Ireland. The region saw increasing interest in early stage deals as investors showed more optimism than they have in recent months. This optimism extended to the possibility of the IPO market reopening in H2’24, although any sustained opening would likely occur after the US presidential election.

Regulations remain key focus in EMEA, particularly in the EU: The EMEA region continued to see the regulatory environment evolve in H1’24, particularly in the EU. Crypto was a particular focus, given the EU’s Markets in Crypto Assets (MiCA) regulation is set to come into effect in December 2024. MiCA will require that crypto companies—such as exchanges, wallet providers, and coin issuers—obtain a license to operate in order to conduct operations in the EU. The regulatory environment could drive renewed interest into the blockchain and crypto space as a result of growing regulatory confidence.

B2B focused fintechs attracting attention in EMEA: During H1’24, B2B focused fintech companies were of particular interest to fintech investors across EMEA, likely in part driven by their ability to produce recurring revenues. Deals in the space ranged quite broadly, with a number attracting international investors. During H1’24, for example, France-based accounting software firm Pennylane raised $43 million in VC funding from investors including Sequoia Capital and DST Global;² the raise earned the company unicorn status.

UK-based fintechs taking different approaches to international growth: A number of mature fintechs in the UK have targeted international expansion as a means to drive growth, however, these activities have been relatively hit or miss given the unique differences in banking practices in various target countries. This has led some mature fintechs, including Starling Bank and Oak North, to pursue other avenues for international expansion, including selling their technology internationally as banking SaaS platform plays. 

Trends to watch for in H2'24

• Wealthtech gaining more attention, particularly from big banks and investors looking to fill gaps.

• Large financial institutions and fintechs looking to leverage AI to drive operational efficiencies and cost reductions.

• Growing focus on AI-driven regtech and cybersecurity solutions, including in areas like KYC and AML and fraud prevention.

• An increasing focus on open banking and open finance in the UK following the general election.

• Potential increase in IPO activity, although any major rebound will likely hold off until 2025.

• Growing interest in blockchain and crypto as startups mature and evolving regulatory environment provides more confidence to investors.