FinTech investments in the second quarter of 2017 were over three times the amount seen in Q2 of last year.
The 25-deal haul made Q2 2017 a record quarter for FinTech deal activity in Sweden. This surge in activity was led by the Payments & Remittances sector which received 13 deals on its own in the period – over half of the overall deals. Total FinTech funding in the country also recovered in the first half of this year after falling to a low of $17m in Q4 2016. However, despite the significant increase in total investment, Q2 2017 saw a 12.7% fall in FinTech investments valued below $100m compared to Q1. This is because almost two-thirds of the total investment went to licensing management provider Snow Software. The company received $120m-worth of private equity financing in late-April courtesy of the Ontario Pension Board and US-based Sumeru Equity Partners, the largest deal in Swedish FinTech since 2015.
FinTech investments in Sweden are on track to surpass the record funding set in 2014
- 2017 seems almost certain to be Swedish FinTech sector’s record year for investment total. The sector has received $261m in funding thus far; a figure just $6m shy of 2014’s high of $267m.
- Deal activity in Swedish FinTech rose consistently YoY at a CAGR of 40.8% between 2014 and 2016. 2016 was a record year for deal activity in Sweden as the sector received 67 investments – more than 2014 and 2015’s deal totals combined. 2017 looks set to follow up and be another record-breaking year having already seen 58.2% of 2016’s total only six months in.
- FinTech investments fell between 2014 and 2016 due to a fall in large deals to FinTech giants iZettle and Klarna. Removing these deals from the analysis revels that FinTech investments to smaller companies grew at a CAGR of 25.5% between 2014 and 2016.
- The average deal size after the close of H1 2017 in Sweden is $6.6m, making the opening half of this year 40.5% lower than the $11.1m average seen in 2014 – the highest yearly average in the period. The average deal size in 2015 and 2016 was $7.5m and $2.6m, respectively, as investors showed increased interest in earlier-stage deals.
The share of deals valued below $2m steadily increased between 2014 and 2016 as investor poured more money in early-stage companies
- The share of deals valued below $2m increased by 35.4% between 2014 and 2017 as more funding is committed to early stage FinTech companies in Sweden. This growth shows strong progress for the FinTech sector in the country, outside of the massive companies like iZettle and Klarna.
- In 2014, 21% of deals were valued above $10m. These deals went to FinTech giants such as Klarna, BIMA, and iZettle. The total amount invested in 2016 fell by almost 30% and this fall in investment is mirrored by a 11.1% fall in the share of investments valued above $10m.
- The first half of 2017 saw a higher share of deals valued over $10m closed, with the share of deals valued $5-$10m returning to levels set in 2014.
FinTech Companies in Sweden specialising in; Payments & Remittances, Infrastructure & Enterprise Software and WealthTech received 60% of deals between 2014 and Q2 2017.
- Payments & Remittances companies received 22% of deals raising a total of $473m worth of funding between 2014 and Q2 2017. Sweden’s largest FinTech companies operate within the Payments & Remittances sector. Since 2016, e-commerce platform Klarna has received more than $246m, while PoS-provider iZettle has received $186m.
- Other Swedish FinTech companies part of the Payments & Remittances sector include e-commerce payments provider Trustly Group and mobile payment company Betalo. In October 2016, Betalo received a $1.16m investment from NFT Ventures and Mattias Weinhandl.
- Companies specialising in Infrastructure & Enterprise Software, WealthTech and Marketplace Lending received just over 50% of deals. The combined investment in these sectors totalled $262m, highlighting the strength of the Payments & Remittances sector in the country.
The Top 10 most active Investors in Swedish FinTech companies participated in 20% of deals since 2014.
- NFT Ventures is the most active investor in Sweden taking part in almost 7% of deals since 2014. The firm invest specifically in financial technology start-ups and their portfolio companies based in Sweden include Betalo, Toborrow and Mr Shoebox.
- Seven of the top ten investors are based in Sweden, with the remaining three; 83 North, Mastercard and GP Bullhound headquartered in Tel Aviv, New York and London, respectively.
- Collector Ventures has been the most active investor in 2017 so far. With investments in mobile payments specialist Mondido, personal finance company Lanbyte and risk management firm Nordkap.
The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies in Sweden as well as across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2017 FinTech Global