Investment in Europe’s fintech networks remains steady whilst Artificial Intelligence (AI) remains a reliable investment magnet according to a recent report from Dealroom, a tech industry intelligence platform.
The group’s latest report found that European early stage venture capital funding has been steady this year, though it did fall to its lowest quarterly total for four years in Q3 2024. This quarter did prove to be a successful one for fintech, however.
Total funding into European fintech stood at US$1.6bn in Q3, up from $1.1bn for the same quarter in 2023. Funding in Q2 and Q1 would also rise, the former from $2.1bn to £2.6bn and the latter from $2.5bn to $2.6bn.
This brings total European fintech funding to $6.6bn for the full year, the fourth most invested-in sector behind enterprise software, energy and health. In a separate but related development, AI, specifically Gen AI, is catching a lot of attention from VC investors.
According to Dealroom, $3.3bn has been invested in Gen AI so far this year. Whilst Gen AI is not directly connected to fintech, with the technology’s use cases being found across various sectors, there is undoubtedly some crossover between the two.
Various banks and other financial institutions have been significantly stepping up their use and investment in AI as of late. Data from Red Compass Labs, for example, found that over half of the surveyed 200 senior payments professionals at EU and US banks plan to leverage AI for payments modernisation, like assisting with instant payments.
Other leading figures, such as Stripe CEO John Collison, have noted the investment opportunity in AI. JP Morgan Chase CEO, Jamie Dimon, has also been open about his belief that AI initiatives will ‘pay for themselves’.
“Over time, we anticipate that our use of AI has the potential to augment virtually every job, as well as impact our workforce composition,” Dimon said in a letter to shareholders earlier this year.
On a broader scale, Dealroom’s latest figures show that fintech remains a strong investment magnet, particularly for early stage investment. This information could prove reassuring for start-ups looking to find funding in an increasingly competitive space.
The company’s last report found that challenger bank Monzo, payments provider PPRO and wealth management firm Flagstone were some of the most invested-in companies in the UK in Q1 2024.
In the months since, Monzo has gone from strength to strength and is now targeting more customers among UK businesses. Meanwhile, Revolut has emerged as Europe’s most valuable startup whilst also reaching its long-held goal of securing a UK banking licence.
