Early-stage deals are taking up a greater share of activity.
Amid continued uncertainty around the ramifications of Brexit, deals and funding to VC-backed fintech companies in Europe dropped to a 5-quarter low in Q3’16 with $233M raised across 38 deals, according to The Pulse of Fintech – Q3’16 report published by KPMG and CB Insights.
For the first time in the 5-quarter trend, VC-backed fintech deal count in Europe dropped below 40. On a quarterly basis, deal count fell by 17% to 38 fintech deals recorded. Funding fell even more dramatically, to $233M, a 43% decline on a quarterly basis.
When looking at deal share we see that activity skews towards the early-stage. Seed deals accounted for almost half of all deal share to European fintech startups in Q3’16 at 45%. Series A deal share fell for the first time in 5 quarters but still represents more than one-fourth of all deal share.
Midstage deals (Series B and C) accounted for 16% of deal share in Q3’16 while late-stage (Series D+) deals clocked in at just 5% of activity.
UK deals and dollars
Both deals and funding to VC-backed fintech companies in the UK dropped to a 5-quarter low in Q3’16.
There were 12 VC-backed fintech deals in Q3’16, the lowest total in the last 5 quarters. Some notable deals in Q3’16 include Velocity Mobile which raised a $22.5M Series B, Crowdcube which raised a $10.5M Series D, and WeSwap which raised a $10M Series B.
Funding to UK-based fintech companies fell below $100M for the first time in the last 5 quarters as well. In Q3’16, UK-based fintech companies raised $78M, a 36% decline on a quarterly basis.
Germany deals and dollars
German fintech deal and funding activity fell to a 3-quarter low in Q3’16.
On a quarterly basis, deal activity fell 21% while funding decreased by 44%. Berlin saw 4 deals across $76.8M in funding. Munich saw 4 deals as well, amounting to a much lesser $11.8M in funding.
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