The first half of this year has proven challenging for French start-ups in the banking and insurance sectors, notes the Fintech Observatory. The sector has seen declining funds, increasing bankruptcies, and low-priced buyouts, impacting the financial technology (Fintech) landscape.
The Observatory’s eighth semi-annual study reveals a growing number of fintech companies either ceasing operations or facing unfavorable acquisition conditions, a trend that emerged last year.
One such case is that of Luko, a budding insurance start-up. After initiating a safeguarding procedure to facilitate debt repayment, Luko announced its full acquisition by the British insurance group, Admiral, on June 15. These circumstances raise questions about the “viability and sustainability of certain business models in the sector,” the Observatory reiterates.
While challenges persist, the association, which collates French fintech figures, did record 73 fundraising instances in the first half of the year, an increase compared to 66 during the same period in the previous year.
However, while the number of operations has increased, the total investment has plummeted, reaching a mere €673 million, a sharp decrease from €1.4 billion between January and June 2022.
The majority of transactions occurred during the seed stage (to launch the project) or Series A (at the project’s early life).
Only one fundraising event surpassed the symbolic €100 million mark in the year’s first half: the operation undertaken by Ledger, a start-up specializing in securing crypto-assets. This contrasts with the same period last year when six start-ups exceeded this milestone.
“Investors are becoming more cautious,” Mikaël Ptachek, President of the Fintech Observatory, told AFP, noting a decreased appetite from American funds.
Avolta, an investment bank, echoed this sentiment in mid-June, stating, “After being the darling of venture capital investors for a few exceptional years, the fintech industry has returned to more familiar ground.”
This shift marks a more sober period for French fintech start-ups, highlighting the need for sustainable and robust business models to weather the challenges in the financial landscape.
