The growing number of fund-raisings marks a new stage for the French financial start-up ecosystem. But these fintechs have yet to rise to the challenge of internationalization. This means complying with local regulations, an action that will be more or less straightforward to implement depending on the business sector to which the startups belong.
Fundraising up 174% in one year
The future looks bright for fintechs, according to the latest figures published by the France Fintech association and relayed by Les Echos. Indeed, in terms of validated deals, finance startups have raised 2.3 billion euros in 2021 via 93 deals, an increase of 174% in one year.
This influx of investment has given rise to 6 new unicorns, companies valued at over a billion dollars: a neobank for professionals, a crypto-currency custody specialist, a health insurer, a financial app, a card that brings together all employee benefits, a platform for detecting fraudulent insurance claims.
Average fund-raising was particularly high this year, at €24.4 million, 86% higher than the previous year, according to France Fintech. This was mainly due to the arrival of American and Asian investors, who generally injected larger amounts than European investors. However, this is not the only reason. The Brexit has undoubtedly made France " the best platform to cover the entire European Union ", reports Alain Clot, President of France Fintech, to Les Echos newspaper.
2.3 billion raised in 2021 (+174%), 5 new unicorns, lots of projects, all with meaning and more and more skilled job creation: fintech, France's sector of excellence! https://t.co/1f8UEWPKjM
- Alain Clot (@AlainClotFFT) December 28, 2021
The perilous challenge of internationalizing French fintechs
Despite record fund-raising, French fintechs are still struggling to gain international visibility. Indeed, only a few dozen startups are attracting attention on the world stage. It has to be said that some products are more transferable than others. For example, startups specializing in payment solutions need to obtain approval in their home country, but this can then be used in any member country of the European Union.
Younited Credit, the consumer credit specialist, is one of the few Fintechs to have successfully expanded into Europe. With operations in France, Italy, Portugal, Spain and Germany, the company has decided not to expand into the UK, as its European Central Bank (ECB) approval is non-transferable. Applying for a new license from the British regulator would have been costly and time-consuming.
Startups with few or no regulatory barriers will find it easier to develop their business internationally.
In the meantime, fintechs still have a lot to do in France, with a domestic market of " 67 million consumers and good purchasing power ", says Alain Clot.