There has been a growing number of fintechs either launching in, or pivoting toward, the business-to-business (B2B) market, with many of these players focused on helping incumbents better serve previously neglected consumers like small- and medium-sized businesses (SMBs).
According to a new research from Innovate Finance and Pitchbook, European B2B fintech investment has reached USD 948 million so far this year, outstripping 2016s USD 741 million total by 28%.
Moreover, B2B fintech investment is making up an ever-larger portion of total European fintech funding: In 2015, it accounted for 34% of total funding, by 2016, it had reached 45%, and year-to-date, it accounts for 46%. Some recent rounds include French SMB neobank Qonto securing USD 11 million from Valar Ventures and Alven Capital in July, and Railsbank, a UK-based fintech that helps parties including SMBs connect to global banking services, closing a USD 1.2 million funding round led by Firestartr in August.
Such fintechs will likely soon account for a greater share of fintech funding globally. Fintech solutions are in high demand among long-underserved SMBs, as well as the incumbents that have struggled to adequately serve them independently using in-house resources.
Moreover, as more clients subscribe to their services, B2B fintechs will have more use cases to point to when explaining the value of their propositions to the mainstream financial services industry, enabling them to attract more investor confidence and backing.
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