Innovations in AI and embedded finance have kickstarted a recovery in fintech funding, according to Q3 figures compiled by Dealroom.
While European startup funding faltered in Q3 2024, with startups raising a total of $11.3 billion - down 35% compared to the same time last year - fintech bucked the trend, recovering from a downturn in 2023.
Funding for fintech startups increased by 45% year-over-year in Q3 2024, reaching $1.6 billion.
AI technologies continue to be a driving force in the European startup landscape. Generative AI, in particular, has attracted significant investor interest, with $165M raised across all sectors in Q3. GenAI companies have raised a total of $3.3B so far this year, representing 8% of total European VC funding.
Despite a decline in late-stage investments, early-stage and breakout-stage deals have remained steady throughout 2024. With a projected $33 billion in dry powder by the end of the year, the ecosystem is primed for further momentum in 2025.
Remus Brett, general partner at LocalGlobe and Latitude, comments: "Europe's fintech sector is back in full force, as these funding figures confirm. Fintech startups, most now AI first, are further accelerating B2C and B2B innovation and opening up more opportunities in this $30 trillion sector. Moreover, the emergence of 'thoroughbred' fintech companies exceeding $100 million in annual revenue is driving growth, job creation, and reshaping the landscape."