Funding squeeze dampens mood at Amsterdam fintech conference

At a fintech conference in Amsterdam this week, the mood among delegates was mixed – although speakers and organisers on-stage were upbeat, especially about the promise of AI

Europe’s fintech industry faces an uncertain future after funding squeezes over the past two years brought lofty pandemic-era ambitions and valuations down, but some are hopeful that lower interest rates will spur a recovery.

At a fintech conference in Amsterdam this week, the mood among delegates was mixed – although speakers and organisers on-stage were upbeat, especially about the promise of AI.

Damien Dugauquier, co-founder of iPiD, a Singapore-based fintech which offers pre-payment validation services, said fundraising was “considerably harder” in Europe compared with the U.S. or Asia, which he attributed to Europe’s weaker economic growth.

I am hoping that it changes for Europe, he told Reuters on the sidelines of the Money20/20 conference, where many of the exhibitors were focused on crypto or artificial intelligence.

Artificial intelligence was the buzzword as the conference started on Tuesday, with talks from some of Europe’s leading tech companies, including Mistral AI. There was a “co-host” AI chatbot interviewed on stage, which malfunctioned at first, and a mind-controlled beer-pouring robot on show.

Fintech firms have been struggling since 2022 to raise money needed to bankroll their operations after central banks hiked rates to fight inflation, ending the era of free-flowing cash.

Dugauquier, who recently closed a $5.3 million funding round said: It took us eight months whereas I guess two years ago it would have taken three months. So it is getting better but it is not back to the crazy days for sure.

For investors looking to assess the state of the industry, major areas of concern were companies’ valuations, their path to profitability in a European economy lagging the U.S. and how they were handling increased regulatory scrutiny of the sector.

I do not know if we are at the end of the downside of the cycle, to be honest, because interest rates are still high, said Helene Falchier, a partner at fintech-focused VC firm Portage Ventures, which says it has $2.5 billion worth of AUM.

VC funding flowing into fintechs in Europe declined sharply last year to $9.2 billion in 2023 from $26 billion in 2022, according to PitchBook data.

There is little sign of fintech fundraising returning to its pandemic-era highs, with funding deal volumes having hit just $4.4 billion in Europe by the end of May, according to the data.

Portage Ventures’ Falchier said company founders had learned lessons from the pandemic era and were more realistic about valuations, although dealflow was still buffeted by external events.

We are in this area where when there is good news I think everyone is really excited and want to move deals, Falchier added. But she also said the market was sensitive to bad news and geopolitical issues.