The Netherlands fintech sector saw a significant increase in funding in H1 2024, with total investment increasing by 39 per cent year-on-year, according to the State of European FinTech 2024’ report.
Amsterdam-based Finch Capital, a European thematic growth investor, announced on Thursday that it has published the 9th edition of annual ‘State of European FinTech 2024’ report.
This report offers key insights into why the Netherlands remains resilient in Europe’s evolving fintech landscape, with funding growth expected to accelerate into 2025.
Here are the key takeaways.
State of European FinTech 2024: The Netherlands
Raised €212M in H1 2024
Dutch fundraising undergo a strategic correction in 2024, with average fund sizes shrinking, yet
the market remains resilient as the number of funds raised climbs from 12 to 13 year-to-date.
The report states that the Netherlands fintech companies raised €212M in H1 2024, a sharp rise from the €152M secured during the same period in 2023.
Dutch VCs get a vital boost
The report also highlighted a significant boost for Dutch VC’s with the launch of the Dutch Future Fund II by Invest-NL and the European Investment Fund.
This agreement allocates a minimum of €200M into Dutch VC funds, providing critical support for fintech startups and scaleups, and fueling further growth in the sector.
Fintech investment is set to accelerate
With a strong VC funding environment ready to take advantage of the Netherlands’ leadership in FinTech and global hubs like Amsterdam, the fintech investment in the Netherlands is expected to gain momentum into 2025, setting the stage for sustained growth in the sector, according to the reports.
Raising stars in the Dutch fintech ecosystem
- Levenue – Helps subscription-based businesses leverage their prime asset: future cash flows.
- Sofie – A personal finance platform that provides multiple services like coaching by financial experts to manage expenses, and financial planning for retirement, among others.
- Carbon Equity – A climate venture capital and private equity investment platform that allows regular investors to invest along with experts in top climate venture capital and private equity funds.
- Pensify – A fintech that helps SMEs to set up a pension within 10 minutes.
- D2X – A crypto derivatives exchange for institutions.
The Netherlands’ most active fintech investor deals in 2024
- Picus Capital – 2
- Contango – 2
- Cogito Capital – 1
- Main Capital Partners – 1
- Coatue – 1
State of European FinTech 2024: Europe
European fintech investment declined
The report reveals that total capital invested in European fintechs in H1 2024 fell by 25 per cent, from €3.8B in H1 2023 to €2.9B in H1 2024.
However, profitability in sub-sectors like banking is driving larger funding rounds as the top challenger banks generated over €700M in profit in 2024 compared to a €150M loss in 2023.
Fintech unicorn funding slowed down
The report also found that funding rounds for fintech unicorns have slowed, with investors prioritising companies with solid financial fundamentals and avoiding overly ambitious valuations based on hypergrowth and unproven profitability.
European exits under £500M now account for 32 per cent of global M&A activity, although the market remains 2-3x smaller than the US for larger deals, according to the report.
UK dominated Europe’s fintech sector
According to the report, the UK dominated the Europe’s fintech sector, accounting for two-thirds of the total volume of deals reached across the continent in the first half of this year.
Major government-backed initiative for long-term growth
On the other hand, Ireland, Germany, and France all saw major government-backed initiatives aimed at growth through 2025, signalling a strong long-term commitment to the local technology ecosystems.
Despite a notable contraction in funding across Europe, some key sub-sectors helped by higher interest levels, such as challenger banks like Revolut and Monzo, are beginning to show profitable growth, adds the report.
Top sub-sectors in deals H1 2024
- Crypto
- Wealth
- Payment
- Insurance
- Banking
Top subsectors in deal value – H1 2024
- Banking
- Crypto
- Payment
- Insurance
- Wealth
Finch Capital: Partners with ambitious founders
Finch Capital partners with ambitious founders in financial and business technology verticals by backing teams to build and grow capital efficiently.
The company invests €5-15M in companies generating €2-15M in ARR.
The company has invested in ±50 companies including Fourthline, Goodlord, eFlow, ZOPA, Twisto, AccountsIQ, NomuPay, and Symmetrical.
Radboud Vlaar, Managing Partner at Finch Capital, says, “The challenges that fintech faced in 2023 were necessary for the sector to mature and become more sustainable. While funding may be down overall, and unicorn chasing has slowed, there is plenty of opportunity for companies that are capital efficient and have a clear path to profit.”
“With AI transforming the industry and significant dry powder still available, the next 12-18 months will mark a turning point for fintech in Europe. The next wave of fintech success stories will likely be built on sound financials rather than rapid revenue growth alone,” adds Vlaar.
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