Europe’s fintech sector has been hit by the pandemic, but there are still several companies that (impartial) investors are excited by.
Fintech investors- The fintech sector has experienced a few bumps over the last few weeks, including reports of a high-profile down-round, a funding dip and data suggesting that 22% of fintech jobs are at risk.
But while it’s easy to get morose, there’s still a great deal of optimism in the market. We asked four of Europe’s most active VCs to highlight specific fintechs they think will come out of the lockdown stronger, buoyed by a new landscape.
We had two simple rules: no listing your own portfolio companies, and no self-promotion!
Check out the VCs’ predictions and explanations below.
Rob Moffat, partner at Balderton Capital
Mobility-based insurtechs, including Cuvva and Bymiles
Consumers have been paying full whack on their car insurance (or maybe a token discount) for the last two months while their car is sat in their drive. They will look for usage-based insurance models instead when lockdown lifts. That also likely means flexible car-subscriptions like Drover will do well, as people will not be comfortable with public transport so will want a car, temporarily, until things settle down.
Digital share brokers, like Freetrade and Trade Republic
Increased volatility in share prices has already brought a huge number of new retail investors into the market. But this has long-term benefits beyond lockdown, likely translating into a new ‘generation’ of active traders and even a newfound cultural embrace of trading (Europe is far behind the US here). Europe’s “zero-commission” startups like Freetrade will want to retain these new users and sell them more lucrative products beyond basic single-stock UK trading, to ensure they monetise.
Catastrophe insurtechs, like Descartes Underwriting and FloodFlash
With some insurers trying to avoid paying up due to coronavirus, trust in the industry will continue to decrease. So businesses and consumers will look out for insurance which pays out automatically under certain circumstances. FloodFlash covers users in the event of a flood by triggering automatic payments once sensors in their property pick up water at a certain height. Meanwhile, Paris-based Descartes underwrites third-party brokers, providing sensor-driven risk-modeling around natural disasters to industries like agriculture, energy and entertainment. Their approach is parametric, meaning clients can trigger immediate payment if certain events occur.