Gemma Lingham, associate director
The incumbents are on a shopping spree. And what’s top of the list? Fast growth fintechs. With a few “unexpected items in the bagging area”, but with plenty of high-in-demand purchases too, it’s safe to say fintech M&A is hotting up.
I’d be lying if I said this was something we weren’t completely expecting. At the end of 2020, our ‘Fintech Driving Global Change’ report predicted this would be coming.
Developed in conjunction with Money20/20 Europe and collating the views of the brightest brains in the ecosystem, 66% of respondents thought that there would be a spike in acquisitions in 2021. And they were right.
According to FT Partners, Q2 of 2021 saw 350 transactions announced, the second-highest quarterly amount ever, only behind Q1 which saw 380 deals.
Two of the bigger ticket items included Visa’s acquisition of Tink and Nutmeg’s sale to JP Morgan. We’re even seeing more established fintechs acquire their earlier stage counterparts, with Square’s recent purchase of Afterpay a shining example.
So, what do fintechs need to take note of when it comes to this increased M&A activity and where does the opportunity lie?
B2B in the bag
Our report last year highlighted that 44% of fintech experts thought B2B companies would be more likely to attract more funding than B2C companies.
Once again, we can see this trend materialising. B2B fintech has raised a whopping $12.8bn so far in Europe alone this year, nearly triple what it was last July.
We’ve also seen some impressive IPOs in the fintech space. Most notably, Wise’s listing – a brand that has taken a laser focus on its B2B/SME offering in recent times.
This is a trend coming through in the spike of fintech M&A activity we’re seeing as well.
Likely symptomatic of the past year and a half, interest in B2B offerings has, and will continue to, skyrocket.
With physical branches diminishing, for example, banks have needed to look at ways to streamline their operations in an online world.
As smaller businesses still seek to survive and recover from the impact of the pandemic, more effective ways of conducting SME lending have also become a necessity.
Benefiting from the browsing
Whatever your company strategy – building to exit, seeking investment, profile-raising with key stakeholders – all eyes are firmly on fintechs.
Whatever the end goal, now is the time to ensure that you are communicating your offering and purpose clearly.
Leveraging the voices within your business, refining the content that you are developing and creating campaigns that tell your story are going to be even more crucial components to future success.
There’s plenty of window shopping occurring in the industry right now, but fintechs don’t need to be focused on a sale to capitalise on this trend.
Fintech M&A has shone the spotlight on the sheer demand for services in this space. By capitalising on this increased activity and honing your communications strategy, now could well be the most important moment in reaching that next milestone.
We’ve helped tell the stories of several fast-growth fintechs at all stages of their growth journey. Contact us if you’d like to hear how we could help you.
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November 20, 2023
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