European FinTech seed deal activity set to hold steady in 2023 in contrast to broad market decline

Key European FinTech seed deal investment stats in Q3 2023:
• European FinTech seed activity totalled at 147 deals in Q3 2023, a 25% drop from Q2 2023
• European FinTech seed activity reached 504 deals in Q1-Q3 2023, and is projected to reach 672 deals in 2023, a 1.1% drop from 2022
• The UK remained the most active FinTech seed deal country in Europe with a 31% share of all transactions

The continued resilience of European companies raising seed deals gives a very positive outlook on the sector going forward and shows the faith that VCs have that FinTech remains innovative and disruptive. FinTech deal activity in Europe has seen a significant 49% drop in Q1 – Q3 2023 YoY whilst seed deals see almost no change YoY. European FinTech seed investments totalled 504 transactions in the first three quarters of 2023 and are expected to reach 672 deals for the entire year, reflecting a slight decrease of 1.1% compared to 2022. European FinTech seed investments amounted to 147 deals in the third quarter of 2023, marking a 25% decline compared to the second quarter of 2023.

Fipto, a treasury management solution for digital assets, had the largest seed deal in Europe during Q3 2023, raising $15.9m (€15m) in their seed round from Motier Ventures and Serena. The French company will use the funding to accelerate its platform that enables companies to manage their corporate treasury and make international payments in fiat and digital currencies using blockchain technology. This funding round follows Fipto’s registration as a Digital Asset Service Provider (DASP) with the French Financial Markets Authority (AMF) in March, which confirms that its services meet strict regulatory requirements.

The UK remained the most active FinTech seed deal country in Europe with 45 deals, a 30.6% share of total deals. Germany was the second most active with 26 deals, a 17.1% share of total deals and France was third with 15 deals, a 10.2% share of deals. Interestingly Germany saw 2 more deals in Q3 YoY whilst France’s activity more than halved.

In June 2023, the European Commission proposed new regulations to modernize digital payments and the broader financial sector, with a focus on enhancing consumer protection, competition, and data security. These rules aim to facilitate secure data sharing to provide consumers with more accessible and affordable financial services. The reforms respond to the significant growth in EU electronic payments, driven by the COVID-19 pandemic and the rise of digital technologies, which introduced new providers and fraud risks. Overall, the reforms aim to make the EU’s financial sector adaptable to the ongoing digital transformation while safeguarding consumer interests.

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