Portugal Fintech: Capital Raising Of Startups Increased To €276M

PORTUGAL FINTECH:

Capital raising of startups increased to €276M

Startups that run in the payments and transfers segment were the ones with the most capital raising opera ons. The “Portugal FinTech Report 2020” shows that the FinTech ecosystem has changed in the last 12 months and the rela onship with regulators has improved. Wri en By Beatriz Da Silva According to Portugal FinTech, the 30 Portuguese FinTechs that stood out in the country increased the amount of capital raised by around €66m in 12 months. The report shows that the top 30 technological innova on companies have raised, since 2017, around €276m, which compares with the capital raised un l last year, that stood at €210m. However, this was not the only change in the na onal ecosystem of financial, insurance, cybersecurity, capital markets and even real estate technological innova on - although the report is called “Portugal FinTech Report 2020”, there are startups that run in another market segments other than fi nance,

hence why they are not truly FinTech (for example, a startup that runs in the insurance segment is known as InsurTech, while a startup that operates in regula on is called RegTech). In one year, the technological innova on ecosystem changed its confi gura on. As stated by the “Portugal FinTech Report 2019”, the top 30 FinTechs were almost equally distributed among the different market segments, which is not the case in this year's report. There is now a clear predominance of FinTechs that operate in the payments and transfers industry, 27% - against 10% a year ago -, followed by InsurTech (19% v 17% in 2019) and startups that operate in blockchain and cryptocurrencies (13% v 10% in 2019). All other industries weigh less two digits in the ecosystem of the analysed FinTechs, which now includes a FinTech that operates in the real estate industry, a new feature that did not appear in the last year’s report. Another change was the increase of national companies who received funding. In 2019, about 46% of the FinTechs analysed had raised capital, rising to 60% this year. In Portugal, the loss of FinTechs based in Lisbon (the FinTech hub in the country) stands out, which now accounts for 54% of companies, against 62% last year. Porto remained with 19% of FinTechs, while Braga increased 6% in the last 12 months, from 10% to 16%.

Regula on remains a priority for FinTech

There are aspects that have not changed between 2019 and 2020. Last year, FinTechs considered regula on as one of the aspects to be improved. This year, 37% of FinTech s ll consider this to be the priority to improve. Despite this, the rela onship between FinTechs and national regulators seems to be improving as 53% of FinTechs considered that there was an improvement in access to na onal regulators, against 50% in the past; 49% considered that regula on had an impact in business development (29% in 2019), against 40% who considered that regula on had a nega ve impact (50% in 2019). FinTechs claim for a greater proximity to the Government. The vast majority of FinTechs (71%) believe that they need a be er rela onship with the public sector (60% in 2019), and only 16% consider that regulators act accordingly to the interests of startups (4% in 2019). Among the main obstacles to overcome, this year’s main challenge iden fi ed by FinTech was the sales cycle (42%), which in 2019 was iden fi ed as the second biggest hurdle to overcome.