Funding to FinTech companies in CEE looks set to fall after a record year for investment in 2016

Total FinTech investments in Central and Eastern Europe hit a record in 2016 with FinTech companies receiving $218.3m, more than double 2015’s total funding

Last year saw record levels of capital going to FinTech companies based in CEE. However, 75.6% of this total came from two debt financing rounds to online loans company 4finance. Discounting these two deals, 2016 actually saw FinTech investments to the region halve, falling from $102m in 2015 to only $53.4m. The first three quarters of the year saw investments valued under $50m already rise above the funding levels in this deal size bracket from 2016. However, investments are still down on levels seen in previous years. For example, 2017 has only seen 53% of the total capital committed in 2015. Deal numbers also look set to decline for a second year running after the total number of deals fell by 25.5% between 2015 and 2016. This decline looks set to continue as only 62.5% of last year’s deals have been closed so far in 2017.

CEE FinTech Investments declined in the first three quarters of this year, despite a spike in deal activity in Q2 2017

  • FinTech investments fell by 71.5% in the last three quarters. Despite this decrease FinTech investments are up tenfold YoY after a particularly weak quarter in Q3 2016.
  • Q4 2016 saw a huge increase in investment in FinTech due to a $52.8m debt financing round to Riga, Latvia-based 4finance which specialises in fast, convenient online loans. Other notable deals in the last five quarters include a $22.7m deal to Warsaw, Poland-based online lender Creamfinance closed in March 2017.
  • Q2 2017 saw a spike in deal activity with several small deals being finalised, including an undisclosed round to the first Bitcoin exchange in Romania; BTCXchange.

Payments & Remittances and Marketplace Lending sectors received the highest share of deals in the first three quarters of 2017

  • Between 2014 and 2016 the share of deals to companies specialising in Payments & Remittances in CEE nearly doubled, while deal share to marketplace lending companies almost halved. However, the first three quarters of this year have seen the deal share to these sectors even out.
  • Despite gradually losing 12% of deal share between 2014 and 2016 WealthTech companies based in CEE have received 13% of deals so far this year. This 13% included a $500k deal to Prague, Czech Republic-based personal finance app Spendee in April.
  • Between 2014 and 2016 the share of deals to sectors in the other category increased by 9%. The other category includes companies specialising in Data & Analytics, Blockchain, InsurTech, RegTech, Real Estate, and Institutional Investments & Trading. 2017 saw FinAi a Warsaw, Poland-based Data & Analytics company raise $1.23m in seed funding from Polish investment fund FIDIASZ.

More than 50% of deals to FinTech companies based in CEE went to companies headquartered in Estonia, Austria and Poland

  • Estonia, Austria and Poland received 52% of FinTech deals since 2014 with companies such as Poland’s Akredo, which specialises in online loans, raising $819.5k across three deals in that period.
  • FinTech companies based in Estonia attracted the most deals since 2014. 61% of companies based in Estonia specialise in Payments & Remittances or Marketplace Lending with the remaining companies operating across the full spectrum of FinTech subsectors. One company which received funding in the last three years is Investly, an SME Finance lender based in Tallinn, Estonia, which raised $672.9k across two rounds.
  • Another 32% of deals went to companies based in Russia, Czech Republic, Latvia and Ukraine.

The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2017 FinTech Global

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