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

  • 2016 saw record levels of total funding going to FinTech companies based in CEE. However, 75.6% of this funding came from two debt financing rounds to online loans company 4finance. Discounting these two deals 2016 saw FinTech investments to this region halve, falling from $102m in 2015 to only $53.4m.
  • Q3 2017 saw investments valued between 0 and $50m surpass investment in this segment in 2016. However, investments are still down on levels seen in previous years. For example, 2017 has only seen 53.0% of the total capital committed in 2015.
  • Deal numbers 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.

Total FinTech Investments steadily 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 week quarter in Q3 2016.
  • Q4 2016 saw a huge increase in investment in FinTech due to a $52.8m debt financing round to Riga based 4finance which specialises in fast, convenient online loans. Other notable deals in the last five quarters include a $22.7m deal to Warsaw based online lender Creamfinance closed in March 2017.
  • Q2 2017 saw a spike in the number of deals with several small deals closed, 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 almost doubled, as deal share to marketplace lending companies almost halved. However, the first three quarters of this year has 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 based personal finance app Spendee closed 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 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 closed between 2014 and Q3 2017 with companies such as Poland’s Akredo, which specialises in online loans, raising $819.5k across three deals since 2014.
  • FinTech companies based in Estonia attracted the most deals between 2014 and Q3 2017. 61% of companies based in Estonia specialise in Payments & Remittances or Marketplace lending with the remaining companies operating across the full spectrum of FinTech sub-sectors. One company which received funding in the last three years is Investly, an SME Finance lender based in Tallinn which raised $672.9k across two rounds since 2014.
  • Another 32% of deals went to companies based in Russia, Czech Republic, Latvia and Ukraine.

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