Let’s see what is fintech startups and what is its situation in Europe and specifically in Spain.
What is a fintech startups?
The word fintech comes from the combination of finance and technology, and refers to the new sector that incorporates the latest financial technology companies and tools that have revolutionized the world of banking and finance.
Fintech startups, on the other hand, are all the new companies that are starting up in this sector. Its demarcation is quite broad, since within it we can place all the businesses that use banking and neobanking applications, as well as innovative tools for payments, crowdfunding, credit granting or cryptocurrencies, to mention just a few specific applications.
An opportunity for funds: investing in fintech startups
Any sector that presents accelerated growth will attract the attention of investors who decide to allocate their money to boost the creation of companies, and the fintech sector is an example of this. In recent years, this has become the favorite of many funds, moving very interesting amounts of investment and attracting investors and funds of high global recognition.
For example, The Jupiter Global Fund – Jupiter Financial Innovation LEUR Acc ended 2020 with a return of 23%, betting on equities within the financial sector. Wellington FinTech S USD Unhedged Acc, on the other hand, obtained a 30.85% return investing in this sector, in a year when the sector’s advances were not yet as powerful as they are today.
Investors have other very interesting options such as Robeco Global FinTech Equities, BGF FinTech or Fintech Income SICAV. All of them bet on the sector, and have obtained very interesting returns in recent years.
Fintech startups that reach stardom: the European fintech unicorns
We consider as unicorns all those startups whose valuation exceeds $1 billion. Although this may seem a rather complicated milestone for a startup business, reality tells us that there are some cases of fintechs where these amounts have already been reached:
- Monzo. This digital bank is only 7 years old, and its valuation already exceeds 2.5 billion dollars. Founded in 2015 in London, it is characterized by its powerful crowdfunding campaigns, which have set records in terms of fundraising speed.
- Revolut. Also a digital bank, it has a valuation of more than $33 billion, and was founded in 2015. It stands out for its high presence at the advertising level across the planet, a strategy that has allowed it to capture more than 3 million international customers.
- Oaknorth. This entity operates by offering loans to real estate developers and companies, with very interesting returns for its customers. Thanks to its successful business model, it has achieved a valuation of more than 2 billion dollars in only 7 years of life.
- Klarna. It is a digital bank that includes an innovative payment system, allowing late payment of amounts, or the division of the payment into three interest-free installments. Founded in Stockholm, its valuation amounts to more than 45 billion dollars.
N26. It is currently considered one of the most important and best valued digital banks at European level, with a valuation of more than $9 billion. It was founded in Berlin in 2013, and its growth has been virtually unparalleled since that time.
What is the future of the sector? The potential fintech unicorns in Europe and Spain that may arrive
Just as we have seen the best fintechs today, we also have other promising companies that are aiming to become unicorns, especially in the fintech map of Spain:
- Clarity AI. It is considered a sustainability fintech, and its valuation reaches 400 million at present. It provides information on the environmental and social impact of thousands of organizations globally.
- Aplazame. It is a Spanish fintech company founded in 2014 and led by Fernando Cabello-Astolfi. It has expert investors in financial and technological matters such as François Derbaix, recently interviewed in this podcast. It offers e-commerce the opportunity for its customers to pay for purchases in a personalized way by inserting payment in installments up to 36 months.
- Bizum. The Bizum project was born in 2016 to connect customers’ bank accounts to their cell phones. In this way, they have simplified transfers becoming the benchmark of this term: “I make you a bizum“. It currently has 200 million active users, works with 31 banks and has introduced the possibility of donating money to NGOs.
We can also highlight some companies with a great future on the European continent:
- Flagstone. It supports and advises large companies, SMEs and individuals on savings (valuation: more than 25 million).
- Zego. Offers innovative and flexible insurance for all types of clients (valuation: more than 40 million).
- Elliptic. Provides regulatory advice to financial institutions (valuation: more than 30 million).
Now that you have seen the main fintechs in Spain and Europe, as well as the funds that are betting on this sector, you can understand the importance it has today, as well as the importance it will gain in the coming years.