Banking via smartphone, car insurance per kilometer driven, interest rate comparisons for overnight money: German founders are banking on new business ideas on the Internet. International donors bring them much trust.
German financial startups raised money at record levels for their digital businesses at the beginning of the year. In the first quarter, investors solicited 686 million euros from investors, more than twice as much as a year earlier (325 million euros). This is shown by the figures of the consulting firm Barkow Consulting, which are available to the German Press Agency.
Money from investors focuses on a few successful startups in the market
Investors put about 77 percent more money in financial startups (“fintechs”) from January to March than in the previous record period, the final quarter of 2018. The sum of 686 million euros corresponded to more than half of the collected funds in the entire previous year, said CEO Peter Barkow.
Financial start-ups have established themselves alongside digital banks with digital business models. With their innovative strength, they sometimes compete with the money houses and sometimes they work with them. In 2018, financial startups in this country had collected more than one billion euros of venture capital for the first time. Companies and venture capital funds give money to founders in the hope that their ideas will prevail and bring them high profits.
At the strong start to the year, lucrative cash injections contributed to booming fintechs, while at the same time the number of deals plummeted by almost a third to 26. This again showed that investors are focusing their money on the few successful start-ups in the market. Thus, the Berlin-based online bank N26 solicited around 260 million euros of funds in January alone. In 2018, the insurer Allianz had already invested in the Geldhaus, which advertises its convenience with smartphones. N26 is considered the first fintech unicorn in Germany, so as a startup company, which is valued at more than a billion dollars.
“German finance start-ups have caught up and come to large sums of money”
High sums also went to the car insurer Friday, the policies priced depending on the mileage (114 million euros) and the insurance startup Wefox (110 million), which offers, among other things, the completion of homeowners and liability insurance by app in minutes. In addition, a group of investors around the US Paypal Paypal 100 million euros in the Berlin company Raisin, the investors on the portal “World Savings” daily and fixed deposits at banks abroad. They promise slightly higher interest rates than domestic institutions.
The global trend towards ever larger cash injections is also taking hold in Germany, said Barkow. “German finance startups have caught up and are coming up with large sums of money.” However, the strong start to the year can not be continued for the full year. In addition, it was noticeable in the financing of startups that although German companies were involved in the deals, but no venture capital funds: There dominated Americans. “German addresses were not here”.
Also published on Medium.