Fintech fundraising: what can we expect at the end of the year?
A recent addition to the fund-raising ecosystem, fintechs have revolutionized the financial sector. As companies that combine technological innovation and financial services, they have become key players in the financial industry, and particularly in venture capital. In this article, we take a look at market trends, both in France and internationally, to understand what's in store for the end of 2023!
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What are the dynamics of fundraising in fintech?
In France, fund-raising is encouraged and supported by strong players who are prepared to invest large sums in young companies. In fact, this idea is beginning to be taken on board by entrepreneurs, who no longer hesitate to apply to raise funds to launch their businesses. In fact, there was 700 fintechs in France by 2022, compared with just 350 in 2018. And this impressive growth isn't the result of a few successful entrepreneurs, it's supported by job creation and real teams! An estimated 32,000 jobs have been created by fintechs between 2018 and 2022.
As you can see, fundraising by fintechs exploded between 2018 and 2022.
With growth multiplying by more than 10 in the space of 5 years, the amount of funds raised has been exploding for several years. This has been made possible by a favorable economic climate for borrowing. However, since the end of 2022, the trend has been reversing. So what can we expect in terms of fundraising?
How will the fund-raising market evolve in 2023?
But what does this mean for 2023? With the rise in interest rates, we know that borrowing from banks will become more difficult, and we therefore expect an overall slowdown in fund-raising. In the Fintech ecosystem, however, growth doesn't seem to be slowing down. In fact, French fintechs are playing an increasingly important role in fundraising. It is even estimated that they will account for 5% of global fundraising by 2023!
In concrete terms, the fintech sector accounted for €1.9 billion in sales in 2022. According to a report by bpifrance, the areas most represented among fintechs are financing (19.6%), functional services (18%) and regtech (16.6%).
As you can see, Fintechs cover a very wide range of fields, from the usual services (financing) to the more unknown sectors (regtech, i.e. the use of technology to facilitate the application of regulatory requirements).
All these aspects of Fintech are driven by entrepreneurs constantly seeking new challenges! Will the current economic climate be able to slow them down? We'll have to wait until the end of the year to find out!
