The recent KPMG Pulse of Fintech for the second quarter of 2021 found that in the EMEA region found that The fintech ecosystem in the Middle East has continued to evolve, with a $75 million raise by Bahrain based crypto exchange Rain and a $50 million raise by UAE-based Tabby in H2’21.
The report also noted that Investor interest in cryptocurrencies is growing in the EMEA region, particularly in jurisdictions like Portugal and Germany which have clear regulations. In 2021, Coinbase established its European headquarters in Germany; it also became the first company to get approved for crypto custody by Germany’s Federal Financial Supervisory Authority (BaFinn). French startup Sorare that offers a platform for trading football NFTs raised $680 million sending its valuation to $4.3 billion, highlighting accelerated market interest for this new fintech space.
Total fintech investment in the EMEA region grew to a record $77 billion in 2021, driven in part by significant M&A activity. While many of the largest deals in EMEA occurred in H1’21 – including the $14.8 billion acquisition of Refinitiv by the London Stock Exchange and the $1billion funding round of Buy Now Pay Later (BNPL) specialist Klarna, making it the highest valued private Fintech in Europe – H2’21 saw the $9.2 billion acquisition of Denmark-based payments processor Nets by Italy-based Nexi and the $929 million acquisition of foreign exchange payments platform CurrencyCloud by Visa.
VC investment surpasses $30 billion
VC investment in fintech skyrocketed in the EMEA region during 2021 – more than tripling from it’s previous high of $9.9 billion in 2020. H2’21 saw numerous jurisdictions across the region raise $100 million+ megarounds, including lesser known fintech ecoystems like Nigeria ($400 million – Opay), Gibraltar ($400 million – Bullish Global), Iceland ($344 million – SaltPay), Denmark ($350 million – Pleo), and Austria ($263 million – Bitpanda), South Africa ($120 million – JUMO), and Ghana ($100 million – MFS Africa).
The payments space was incredibly hot across the EMEA region, with deals ranging from the $9.2 billion acquisition of Nets by Nexi to a $400 million raise by OPay in Nigeria – which earned the company unicorn status; the raise was also the largest single round raised by a startup in Africa ever1.
Digital banks remain in the spotlight
2021 saw a significant amount of VC funding flow to digital banks, with the lions share going to mature challenger banks in Europe – including a $900 million raise by N26 and an $800 million raise by Revolut in the second half of the year. H2’21 did throw some wrenches into the space as both N26 and Monzo bank decided to forgo the US market – primarily as a result of regulatory complexity. Profitability also continued to be a challenge – which could lead to some consolidation in the digital banking space longer term.
In terms of trends for 2022, the KPMG report sees increased investment in DeFi, and a push for the development of a common regulatory framework for crypto. They also expect growing fintech deal sizes in the Middle East and Africa.