2023 Mapping of French Early Stage Fintech startups

NewAlpha Asset Management publishes the 6th edition of its annual mapping of French Fintech Early Stage

Paris, February 15, 2023

Since the launch in 2015 of the first French Venture Capital fund dedicated to European Fintech, NewAlpha’s team of expert Fin&Tech investors has been in daily contact with entrepreneurs and institutional players in the financial industry.

With several hundred companies analyzed by this specialized team, this mapping updated to the end of December 2022 offers a picture of the dynamics of the French FinTech sector.

In order to maintain a differentiating and analytical look at the evolution of the Fintech sector, we maintain for the 2nd consecutive year our analysis on the French Early Stage Fintechs (less than 5 years old) which are so important for the emulation of the financial industry and which will succeed the numerous Fintechs now established.

Despite the 2022 environment, the Fintech ecosystem remains preponderant on the French Tech scene, entrepreneurial momentum is strong, and investors have continued to support Early-Stage Fintechs (¾ of Fintech fundraising deals identified in 2022).

“Flight to quality, M&A and bootstrapping were the watchwords of this year 2022, which once again saw the global economic situation take a beating. Entrepreneurial dynamism did not dry up. Nevertheless, the most attractive companies are those that have been able to demonstrate excellent execution qualities and adapt to the healthy evolution of the financing market.

Rationalization of resources and accelerated convergence towards traditional financial equilibrium have been on the agenda of entrepreneurs, their teams and their shareholders throughout the year.

This is undoubtedly a blessing in disguise for the years to come, despite the significant contrast with the evolution of the sector that we have seen in previous years: Early Stage Fintechs are now integrating these rationalization and capital efficiency issues from the very beginning of their development.

The French Fin&Tech scene is more promising than ever,” said Lior Derhy, Managing Partner at NewAlpha.

 

The full study can be downloaded here.

 

KEY FINDINGS

Despite the economic downturn, the Fintech ecosystem remains a major player on the French tech scene and continues to attract a large number of entrepreneurs

  • The 300 Early Stage Fintechs identified in this mapping are French Fintechs, entrepreneurial, less than 5 years old and active at the end of 2022 (+12% compared to those that met the same criteria at the end of 2021)
  • The entrepreneurial dynamic and the renewal of offerings are as strong as ever. 127 Early Stage FinTechs have entered this new 2022 edition. Driven by a context of strong savings rates, increased need for financial management and the development of crypto-currencies, Investment Solutions startups are the biggest contributors to this evolution (+42 startups), followed by Tech for Finance (+29 startups).
  • Cumulatively, startups in the Investment Solutions, Insurtech and Paytech segments occupy the podium of Early Stage Fintech at the end of 2022.

 

Increased investor interest in early stage deals in a particularly turbulent financing market in 2022

  • French Fintech has captured about 20% of the funds invested in French Tech.
  • The economic slowdown that began in Q1 certainly impacted the level of investments recorded from Q2 onwards, but not the number of companies that benefited.
  • Early-Stage Fintechs have effectively completed more than ¾ of the Fintech fundraising deals identified in 2022 (86 deals, +21% compared to 2021) for a total amount of €886m (+40% compared to 2021). The share of early-stage fintech investments has increased from 29% in 2021 to 35% in 2022. Nevertheless, the economic situation has led to a sharp decline in the average amount of funding received by companies in the sector: -36% for early-stage fintechs (€7m vs. €11m in 2021) and -61% for fintechs older than 5 years (€26m vs. €67m in 2021).
  • M&A has been particularly active in 2022: 28 deals in 2022 (vs. 85 deals identified since 2015) including 8 deals on Early Fintechs. This increase reflects the consolidation of the sector, driven by over-financed scale-ups over the past two years, targets that have sometimes had to face complex refinancing conditions, and private equity funds that are increasingly active in the market.

 

METHODOLOGY

The 300 Early Stage Fintechs identified in this mapping exercise are entrepreneurial French Fintechs that are less than 5 years old and active at the end of 2022. These Fintechs are actively participating in the digital transformation of the banking, insurance and asset management industries. They offer new financial products and services or digital solutions that enable financial industry players to optimize their business processes.

They are grouped by sector of activity and seniority in order to follow their entrepreneurial dynamics over the past few years. An analysis of fundraising and M&A transactions by sector also helps to anticipate changes in the financial industry.

 

DISCLAIMER : INFORMATION DOCUMENT. THIS DOCUMENT IS INTENDED FOR NON-PROFESSIONAL INVESTORS WITHIN THE MEANING OF THE MIF II DIRECTIVE.

The information contained in this document is provided for information purposes only and does not constitute an offer or solicitation to invest, nor does it constitute investment advice or a recommendation on specific investments. The information, opinions and figures are considered to be accurate as of the date of their preparation. NewAlpha Asset Management does not guarantee the completeness, accuracy or reliability of the information contained in this document. It is not contractually binding, is subject to change and may differ from the opinions of other professionals. Reproduction or reuse of all or part of this document is prohibited without the prior consent of NewAlpha Asset Management. Published by NewAlpha Asset Management – Simplified joint stock company with a capital of 2,095,960 euros – RCS Paris 450 500 012 – VAT number: FR 18450500012 – Portfolio management company approved by the AMF under the number GP05000001 of January 20, 2005 (www.amf-france.org).

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