Emerging companies received, for the first time in a long time, less money from investors during the crisis generated by the coronavirus pandemic (COVID-19), revealed a study carried out by Comdirect bank with the consulting firm Barkow Consulting and the investor from Commerzbank Main Incubator.
According to the study, financial technology or Fintech startups received 953 million euros (about $ 1.1 billion) in venture capital from January to September, which was almost a third less (29%) than in the first nine months of last year , when funds and business groups invested around 1,300 million euros in this sector.
The report shows that the crisis triggered by COVID-19 halted the financing phases in the third quarter and forecasts a decline in investments by the end of the year compared to the strong quarter of the previous year.
“Although 2020 will be the second best year for investments made in the Fintech sector in Germany , the lower number of investments with a volume of more than 100 million euros is having a clearly negative impact,” said Matthias Hach, member of the board of directors of Comdirect.
The fall in financing represents a turning point for Fintech companies , who want to use intuitive technology to make savings, investment, insurance or real estate services faster and more convenient.
Since the study began in 2012, investments in startups were on the rise every year, even in 2018 and 2019 there were growth rates of more than 50% compared to the previous year.
During the long economic boom and in view of low interest rates, investors did not notice money, and start- ups received record amounts for their business ideas.
According to the study, more than 6,000 million euros in venture capital flowed into this sector since 2012, to which must be added investments for acquisitions and debt capital.
In the current year, the industry continued to grow to 946 fintech companies at the end of September, although fewer were created.
In Hach’s view, innovation in the financial sector remains high: “In times of low interest rates, there is a greater trend for simple and mobile investment opportunities.”
The Fintech are benefiting from the digitization of the financial industry. However, according to a study by the consulting firm PwC, in recent years, a series of bankruptcies and acquisitions revealed that relatively few survive.
Among the most successful financial start-ups are interest rate portals, which allow savers to choose the banks that offer the best terms from among the many offers.
Some robots have also grown that invest their capital in a diversified way in the stock market, as well as the N26 bank in mobile banking.