WealthTech and InsurTech sectors drive German FinTech towards record investment level in 2019

FinTech startups and scale-ups in Germany raised nearly as much capital in Q1 2019 as they did in the whole of last year, according to latest research from FinTech Global

Germany’s FinTech sector is attracting ever more investment capital as the country takes another step forward in its ambition to build a world-leading FinTech ecosystem. Investments in German FinTech companies reached $793m in the first three months of 2019, equivalent to 96% of last year’s total. 

The strong start to the year can be attributed to four large transactions involving Raisin, wefox Group, N26 and FRIDAY respectively. Each deal was valued at over $100m, whereas the whole of last year saw only two deals completed in this size bracket.

The rising number of larger, later-stage deals has pushed the average deal size up from $3m in 2014 to $38m in the first quarter of this year. The trend looks set to continue as the FinTech landscape in Germany matures further and more key players establish themselves.

Larger transactions in WealthTech and InsurTech account for a substantial share of the increase in investment

Germany’s highly developed wealth management and insurance industries have been at the forefront of investing in innovation.

The top four FinTech deals, each valued at over $100m, were in the WwalthTech and InsurTech sectors. They raised an aggregate of $667m, accounting for over 84% of the total capital raised during the quarter.

The largest transaction involved N26, the Berlin-based challenger bank. The company’s $300m Series D round, which valued it at $2.7bn, took place in April of this year and will enable the bank to further its growth plans throughout Europe, as well as to reignite its US expansion plans.

The biggest transaction completed by an InsurTech company, and also the second largest funding round so far this year, involves the $128m raised by FRIDAY, which offers car insurance products. Two of the three investors in the round were German-based: SevenVentures and German Media Pool.

Wefox Group, which operates a digital insurance marketplace, raised a $125m Series B round in March. The latest capital injection will be used to acquire more brokers, to add to the existing network of 1,500, and to expand its product and engineering teams.

The third largest deal in this period was Raisin’s $114m Series D round. The savings and investment marketplace plans to use the investment for further global expansion and strategic acquisitions.

It's apparent that the city of Berlin continues to dominate the German FinTech scene. Only one transaction in the top ten was located elsewhere: Personio, a Munich-based HR and applicant management platform, which offers a solution for payroll accounting, raised a $40m Series B round.

Infrastructure & Enterprise Software companies attracted the largest share of investment capital over the previous five years

Although the first quarter of the year saw large WealthTech and InsurTech deals take centre stage, the most active sector last year was in the Infrastructure & Enterprise Software category, which has witnessed a 30-fold increase in investments over the five years between 2014 and 2018 from $8.4m to $265m.

Over the same period, investments in WealthTech companies increased by 42 times (from $6m to $254m) and in InsurTech companies by 26 times (from $5.4m to $143m).

The German FinTech ecosystem has done an impressive job at combining its traditional strengths in asset management and insurance with skills in technology to enhance these industries and create innovative and better customer-focused products. FinTech in Germany will undoubtedly continue to grow strongly in these areas, but we also expect to see the development of strong global challengers in other FinTech subsectors soon.

Further Information

If you're interested in more details about every company, investment and trend in WealthTech or InsurTech, sign up to the FinTech Global database or research service.

If you would like to engage with the senior decision-makers at asset/wealth management and private banking companies, or to meet the leading WealthTech companies from around the world, join us at the Global WealthTech Summit in London in November 2019.

If you would like to meet the leaders of insurance companies and innovative InsurTech companies who are shaping the future of the insurance industry, join us in March 2020 for Europe's leading InsurTech event: the Global InsurTech Summit.