Investment in B2B fintech in Europe to date has reached $18.5bn in 2022, which outstrips the $7.5bn invested in B2C fintech in 2022- and experts believe this gap could grow even further next year.
The days of fintech being synonymous with sexy neobanks or the latest hyped investment app appear to be in retreat, at least from an investment perspective.
2022 was all about the (arguably unglamorous) world of B2B fintech, with investors ploughing billions into B2B payments, B2B enterprise software and B2B insurance- and experts believe the trend will continue next year.
In fact, investment in B2B fintech in Europe has so far trounced investment in B2C fintech in 2022, which experts say is suffering from an innovation blockage.
Investment in B2B fintech in Europe to date has reached $18.5bn in 2022, a figure which outstrips the $7.5bn invested in B2C in 2022 (although some firms operate in B2B and B2C, so there is some double counting in these figures), according to PitchBook data.
Overall investment in European fintech funding to date in 2022 is $21.9bn, according to PitchBook.
Big B2B fintech investments this year include wealth management platform FNZ raising $1.4bn; payments firm Checkout.com raising $1bn; and B2B insurtech Wefox raising $400m.
Experts say there are several reasons for the chasm between B2B and B2C investment levels, including B2B fintech investment being more shielded from a depressed economic climate; the natural cycle of fintech’s evolution; or simply that the more exciting technology and innovation is now in B2B fintech.
One fintech boss believes the boom in B2B fintech investing will continue in 2023, as investors see the opportunity to upgrade “slow” and “clunky” legacy technology.
Liam Chennells, founder and CEO of Detected, which helps businesses automate verification, said: “I think people are realising the experience that people demand of B2C products is being transferred to B2B.
“And a really good example of that is Amazon for Business, which is effectively a procurement platform but it allows people to engage with it as if it’s Amazon B2C.
“People expect in the business space to have the same experience as in the consumer space. So, investors look at that and see the opportunity to upgrade all those legacy systems that feel clunky and slow and manual. So there is a real opportunity in there.”
On the recent tapering off of investment in neobanks, Chennells said this trend will continue unless the neobanks can “build strong B2B or international propositions.”
He added: “I think a lot of the neobanks have realised that building a domestic B2C proposition was doable but unless you can grow internationally or grow a second product line, which is the business offering, then you have reached a ceiling.”
On B2B being more shielded compared to B2C from economic factors, he said the “right businesses will continue to get investment”.
But he added that fintech bosses in 2023 would need to have a “stronger thesis” compared to 2022 to convince investors to part with their money. But he said this “correction” is a good thing.
On sectors within B2B fintech which will be hot in 2023, he cited compliance as well as B2B e-commerce which will also be a “massive growth area”.