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German fintechs have attracted record investment in 2019

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
German fintechs are attracting attention from US and Chinese investors. Photo: Getty Images

Germany’s fintech startups have had a record start to the year.

Investors poured €686m (£588m, $768m) into the country’s digital financial firms in the first quarter of 2019, according to Barkow Consulting. That is more than double the investment compared to the same quarter a year ago, and 77% higher than the previous record, which stood at €385m in the fourth quarter of 2018.

“The sector is growing up and we have more and more fintech startups,” Peter Barkow, founder of Barkow Consulting, told Yahoo Finance UK. “The global appetite for fintech from the US and China is tremendous — and these German companies are on their screens.”

German fintechs are reaching critical size too, Barkow said, which “obviously puts them on the screens of leading international investors.”

Barkow Consulting reported that there were 26 equity deals in the first quarter of this year, a 30% decline versus Q1 2018. However, it counted four deals at or above €100m in funding over the quarter. Online bank N26 was the top of the pile with a record €260m investment, followed by Friday at €114m, WeFox at €110m, and raisin at €100m.

Berlin-based N26 became Germany’s first unicorn of the year — and the most valuable non-listed fintech startup in Europe — in January this year. Its investors include Peter Thiel’s Valar Ventures, Tencent, German insurer Allianz, Insight Venture Partners, and Singapore’s GIC sovereign fund.

READ MORE: Germany’s newest unicorn is now Europe’s most valuable fintech company

N26, founded in 2013, says it has 2.5 million customers in 24 European countries. The online bank plans to launch in the US by the middle of the year. Markus Gunter, CEO of N26’s banking arm, told Bloomberg this week that N26 was changing its strategy to pursue global expansion over broadening its banking-product range.

“Regional expansion will take precedence over product expansion,” Gunter said. “Some people claim you can’t make money from 20-year-olds, but you can if your costs are low.”