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A Record Number Of Startups Join Europe’s Fintech Unicorn Herd

At the start of 2021, Europe had just one decacorn—a startup valued at $10 billion or more—in the fintech sector to speak of: Klarna, the fast-growing buy now, pay later platform.

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Since the start of the year, the continent has minted another two decacorn startups—Revolut and Checkout—and added a record 19 new fintech companies to the ranks of private company unicorns, Crunchbase data shows. 

The rise in the number of highly valued and heavily funded fintech startups in Europe shows how the continent is taking a lead in disrupting multiple sectors: from payments and e-commerce to banking, insurance, lending, crypto and trading. 

To be sure, it’s not just Europe’s fintech sector that’s drawing investor interest and crowning new unicorns. There has been a record number of new European startups valued at $1 billion or more in 2021 across all sectors, Crunchbase data shows, mirroring an escalation in venture funding to the continent in the first half of this year.

All told, there are now 125 private company unicorns headquartered in Europe, according to Crunchbase data. 

Close to a third of those—39 private companies—are in the financial services sector. With the fintech sector emerging as one of Europe’s biggest unicorn creators, we decided to take a look at the top-funded companies in the space and the investors leading the way.

Year of the unicorn

Europe’s fintech unicorns have collectively raised $22.6 billion to date, Crunchbase data shows, and are altogether valued at $178 billion. 

More than half of the capital—$11.5 billion—was raised this year alone. Close to half of Europe’s fintech startups joined the unicorn board in 2021, with 19 new companies including Berlin-based commission free broker Trade Republic, London-based challenger bank Starling Bank, Paris-based health insurance platform Alan, and Denmark-based employee smart card company Pleo being valued at $1 billion or above by private investors. 

Another 13 European fintechs are waiting in the wings on our Emerging Unicorns list. These are startups that have in total raised $3 billion and are collectively valued at $9 billion. 

For context, there are 100 U.S.-based unicorn startups in financial services, including five that are valued as decacorns. These decacorns include Stripe, the most highly valued U.S. unicorn, which is co-headquartered in San Francisco and Dublin, Ireland.

Word to the wise

Europe’s unicorns are starting to make their exits, too.

The most recent European fintech startup to exit is London-based money transfer company Wise, which was valued at $11 billion in a direct listing on the London Stock Exchange in July 2021, and its value increased to more than $13 billion as of Aug. 25. U.S. investors Valar Ventures, IA Ventures, Andreessen Horowitz and U.K.-based Baillie Gifford, all owned significant stakes in the company. Early investors include Seedcamp, which invested in Wise’s pre-seed round, and IA Ventures and Index Ventures, which both led the seed funding. 

Leading investors in fintech unicorns

Index Ventures, Seedcamp and Accel have the highest investment count in European financial services unicorns, Crunchbase data shows. 

Seedcamp stands out as investing in the highest portfolio count at the seed stage while Valar Ventures and Index Ventures have the best track record for investing at Series A in companies that become unicorns. 

Investors with the largest portfolio leads at late stage include DST Global, Tiger Global Management and TCV

European fintechs come of age

Europe’s fintech decacorns have only gotten bigger this year. 

Klarna was valued at $31 billion at the beginning of March, a number that ballooned to $45.5 billion in fewer than three months. The Stockholm-based company is reportedly considering a public-market debut next year.

Revolut was valued at $6 billion in July 2020 through a Series D extension and a year later was valued at $33 billion. Checkout was valued at $5.5 billion and in less than a year, as of January 2021, it was valued at $15 billion. These latest funding rounds were led by two firms; London-based SoftBank Vision Fund led Klarna’s funding round, and New York-based Tiger Global Management led the Checkout Series C. And both firms co-led Revolut’s Series E funding round.

Funding to European companies in financial services has already peaked at $21.7 billion this year so far, with investment in more than 800 companies. With more than 200 companies each raising $10 million or above in a funding round, we do not see this sector slowing down anytime soon.      

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Illustration: Dom Guzman

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