In Europe, fintech has risen to prominence as a leading startup sector, with some of the continent’s biggest tech companies operating in the field.

These success stories have not only driven innovation but also cultivated some of Europe’s most active angel investors, who are now playing a critical role in nurturing the growth of their local ecosystems, according to a new report by Atomico, a London-based venture capital (VC) firm.

The 2024 edition of the State of European Tech report, released in November, looks at the evolution of the European tech ecosystem, the progresses made, but also the hurdles to overcome for sustained success.

According to the report, European companies valued at more than US$1 billion have proliferated in recent years, with the number of unicorns created in the past decade standing five times higher than pre-2015 levels. In particular, the finance sector led this surge, accounting for 24% of all unicorns formed in the past five years.

Fintech: a leading tech sector in Europe

Responses to a survey of industry stakeholders conducted for the report underscore this dominance, with fintech companies like Revolut, Klarna, Adyen and Wise standing out as emblematic of the growth of the European tech sector over the past ten years.

Revolut was named by 15% of respondents, ranking second after Spotify (26%). These companies are followed by Klarna and Adyen, with 110+ and 90+ mentions, respectively, underlining Europe’s characterization as a global centre of excellence for finance. Wise is another fintech company named, cited more than 50 times.

Revolut is a neobank and fintech company headquartered in London that offers banking services for retail customers and businesses, including currency exchange, debit and credit cards, virtual cards, Apple Pay, interest-bearing “vaults”, personal loans and buy now, pay later (BNPL), and stock trading.

Founded in 2015, the company serves over 45 million retail and 500,000 business customers globally, operates in more than 140 regions and supports over 25 currencies.

Recently, Revolut reached a US$45 billion valuation after a secondary share sale, making it worth more than some of Europe’s biggest banks, Reuters reported. In July, it was granted a UK banking license after a three-year wait, though with some restrictions.

Klarna is a leading global payments and shopping service, boasting 85 million active end-users, and more than 575,000 merchants in 26 countries. Founded in 2005 in Stockholm, Klarna offers direct payments, pay after delivery options and installment plans in a smooth one-click purchase experience.

Klarna achieved net income of SEK 216 million (US$19.8 million) in Q3, up 57% year-over-year (YoY) and marking the second profitable quarter for the company.

Klarna recently filed for an initial public offering (IPO) in the US. While no financial details have been provided, analysts in October put Klarna’s implied valuation at about US$14.6 billion.

Adyen is a Dutch payment company with the status of an acquiring bank that allows businesses to accept e-commerce, mobile, and point-of-sale (POS) payments. Founded in 2006, Adyen provides end-to-end payments capabilities, data-driven insights, and financial products in a single global solution, serving the likes of Meta, Uber, H&M, eBay, and Microsoft.

Adyen is listed on the stock exchange Euronext Amsterdam with a market capitalization of more than US$47 billion.

Finally, Wise, formerly known as TransferWise, is a global tech company, specializing in cross-border transactions. Serving both individuals and businesses, Wise allows its customers to hold 40 currencies, move money between countries and spend money abroad.

Launched in 2011, Wise is one of the world’s fastest growing, profitable tech companies, supporting around 12.8 million people and businesses, and processing approximately GBP 118.5 billion (US$151 billion) in cross-border transactions in its fiscal year 2024. Wise is listed on the London Stock Exchange under the ticker, WISE.

Fintech entrepreneurs shape the European tech ecosystem

Europe’s fintech success stories extend beyond operational growth to fostering local innovation. This manifests both in the number of investments Europe’s fintech founders make, but also their contribution to building their local market.

Taavet Hinrikus, co-founder of Wise, is currently the most active angel investor in Europe. Hinrikus has made more than 90 investments to date with roughly half based in either the UK or Estonia, Wise’s two key hubs.

Another prominent angel investor is Tom Blomfield, co-founder of GoCardless and Monzo based in the UK. Blomfield has made more than 40 investments to date, with 60% of these investments being based in the UK. He is the fourth most active angel investor in Europe.

Other fintech founders in the leaderboard include Maximilian Tayenthal, co-founder of N26, ranked 8th with more than 30 investments to date, and 68% of these investments being in Germany; and Stefan Jeschonnek, co-founder of SumUp, ranked 9th with more than 30 investments and 45% of these investments being in his home country of Germany.

Europe’s tech momentum

Europe has become a global leader in technology. The continent is now home to over 35,000 startups, a fourfold increase from fewer than 8,000 in 2015. Growth-stage companies, meanwhile, saw an eightfold increase to over 3,400.

The tech workforce has also expanded significantly, with 3.5 million people now employed in the sector. The vast majority of those employees have joined over the past decade with close to 3 million jobs created over that time frame. It’s growing at a 24% compounded annual growth rate, comparable to the US.

Total funding over the past decade is ten times higher than that of the previous decade, having soared from US$43 billion to US$426 billion. This year, investment levels are on track to reach around US$45 billion, three times as much as the US$15 billion recorded in 2015.

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