The high level of capital raised in Q1 was due to four exceptionally large deals
- Total value invested in German FinTech companies topped $793m in the first three months of 2019, the capital raised so far is equivalent to 96.2% of last year’s total investment.
- The strong start to the year in Germany can be attributed to four large transactions, each valued at over $100m. These four funding rounds made up 84.0% of total investment in the quarter. The whole of last year saw only two deals completed in this size bracket.
- The largest deal in Q1 was N26’s $300m Series D round, which valued the company at $2.7bn. The Berlin-based challenger bank, which has expanded to numerous countries in Europe, plans to use the latest capital injection to reignite its US expansion plans. GIC (Government of Singapore Investment Corporation) and London-based growth equity firm Greyhound Capital participated in the round, which was led by American VC firm Insight Partners.
- Deal activity was also elevated in the first quarter with 21 deals, almost double the number of deals completed in Q1 2018.
Deals valued at under $100m in Q1 made up just 16.0% of total amount invested
- The total capital raised in Q1 was more than double the level of investment in any quarter last year. Deal activity in this period was also the highest out of the last five quarters.
- However, excluding deals valued at $100m and over, the capital raised by German FinTech companies last quarter, $126.9m, is less than all but one of the last five quarters.
- The rising number of larger, later stage deals driving FinTech investment forward has pushed the average deal size up from $5.5m in 2014 to $61.0m in the first quarter of the year. This trend looks set to continue as the FinTech landscape in Germany further matures.
WealthTech and InsurTech companies dominate the top ten German FinTech deals completed in this quarter
- The top ten deals completed by Germany-based FinTech companies last quarter collectively raised $791.1m, which constituted over 99% of the total amount invested so far this year. Companies in the WealthTech and InsurTech subsectors attracted five of the top ten deals, and these transactions collectively raised $698.6m.
- The second largest funding round so far this year is $127.7m raised by FRIDAY. The Berlin-based InsurTech company offers car insurance products. Two of the three investors were German-based, consisting of venture capital firm SevenVentures, which accelerates the growth of B2C companies and independent media for equity fund German Media Pool.
- The third largest transaction last quarter was wefox Group’s $125m Series B round. The Berlin-based insurance marketplace has more than 1,500 brokers and 400,000 customers on its platform. Wefox Group will use the latest capital injection to acquire more brokers throughout Europe and also to expand its product and engineering teams.
- The only top 10 transaction not raised by a Berlin-based FinTech company was Personio’s $40m Series B round. The Munich-based HR and applicant management platform, which offers a solution for payroll accounting, will use the funding to scale across Europe. Since its inception in 2015, Personio has acquired over 1,000 clients in more than 30 countries.
Companies in the Infrastructure & Enterprise Software, WealthTech and InsurTech subsectors are driving FinTech investment in Germany
- The Infrastructure & Enterprise Software, WealthTech and InsurTech subsectors saw the biggest increase in investment in over the last five years, with companies in each of these subsectors attracting at least 25x more investment last year than in 2014.
- Infrastructure & Enterprise software companies attracted the most funding last year and collectively raised $250m. The largest transaction in this subsector in 2018 was Deposit Solution’s $100m private equity round. The Hamburg-based startup provides an open banking platform for deposits, connecting banks and depositors across Europe.
- The WealthTech subsector saw the second largest increase from a starting level of $6m in 2014. Three of the four largest funding rounds in this subsector since 2014 were raised by the previously mentioned neobank N26. The third largest round in this subsector over this period was Raisin’s $114m Series D round, completed earlier this year. The savings and investment marketplace connects retail customers with banks looking to expand or diversify their deposit reach. Raisin plans to use the investment for further global expansions and “strategic acquisitions.”
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. ©2019 FinTech Global