Poland Received the Most FinTech Investment in Europe in 2020

From the advent of the startup revolution a decade ago, Europe has become a collective hub of FinTech startups which form the largest category in Europe’s investments. The sector has enjoyed tremendous growth in the last few years, with the volume of FinTech investments rising from €3.52 billion in 2018 to €8.81 billion in 2019. And when the Covid-19 pandemic hit in early 2020, most companies took a nosedive in their economies, with a majority either downsizing or just shutting down.

But then, the shocking truth is that despite the supposed difficulties in fundraising, European FinTech companies have managed to convince investors to fund their ventures, with the figure for 2020 approximated at €10 billion. Looking at startup investment rounds, Poland emerged at the top in Central and Eastern Europe with 313 rounds, which was way above Hungary, which came in the second position with 110 rounds. Moreover, 9% of the Polish companies that secured over €430 million in funds in 2020 are in the FinTech space. Just in case you were wondering, FinTech is what drives payment getaways via the internet on platforms such as online casino PL, online shopping sites and any other internet-based service that involves monetary transfers.

With such numbers in play in the Polish scene, it begs the question of what contributed to the rise in the number of investments in the region. Read on to discover why Poland received more FinTech investments compared to other EU countries in 2020.

The Polish Startup Landscape

In recent years, Poland has become an international destination for venture capitalists. The Polish startup market has been developing pretty fast, and the potential that it holds for investors is immense. FinTech is a significant part of VC (Venture Capital) investments due to the fact that it is a disruptive industry that has created a considerable number of Unicorn startups. The country boasts over 3,000 startups and more than 130 VCs.

And did you know that Poland was the only country in the EU to come out of the 2009 recession unscathed? When you combine this with Poland’s track record of political stability, you get enough reasons why investors did not shy away from making investments. One big beneficiary of the 2020 FinTech investment wave was Uncapped, a finance provider that started in 2019 and managed to raise €21 million in September.

Public-Private Funds

The presence of ready financial development systems within the EU saw a majority of the funds (over 50%) being attributed to EU and government-backed sources. These include the National Centre for Research and Development and the Polish Development Fund (PFR) Ventures. While international investments were also significant, there was also an increase in co-funding efforts in local-foreign partnerships.

Software Sector in Poland

The Polish enterprise software market received 15% of the financing that made its way to startups in 2020. While this is a vast field with multiple areas, it plays a major role in the FinTech arena as most software companies are the backbone of innovation in finance-based solutions. Furthermore, partnerships between FinTech and software providers have fast-tracked improvement in the approach to FinTech solutions. On top of that, many incubator programs run by software bigwigs like Google and Microsoft are acknowledged as contributors to the success witnessed in 2020.

FinTech’s General Growth During Pandemic

FinTech on its own has managed to grow even more rapidly during the pandemic due to the need for remote access of funds and making contactless transactions. In fact, the financial setbacks experienced by most people led to more FinTech solutions that would reduce the cost of services across the board. According to World Bank Director for Finance, Competitiveness and Innovation Caroline Freund, FinTech has proved to be a tool for closing financial service delivery gaps to households and firms.

Indeed, throughout 2020, FinTech was at the center of ensuring the smooth running of operations in businesses, household, and even relief efforts, while at the same time experiencing strong growth. From the look of things, the FinTech industry is just kicking off with new approaches to solutions being added to the pool and revolutionizing the entire financial services market. Therefore, we should expect a more robust future for FinTech in Poland and across the world as innovation in the sector at large continues.

Final Thoughts

It may come as a surprise for Poland to have attracted such a huge number of FinTech investments in the middle of a major world crisis. But then, when you carefully analyze the situation, you will find that it’s not a matter of luck but strategy. The country has worked hard to set itself among the major European FinTech hubs, being the 8^th largest economy in the EU.

The current trends on the market indicate that the global FinTech industry is projected to grow in value to more than $309 billion by 2022. The transaction value is also estimated to grow from $5.2 to $6.6 trillion due to the increased usage of FinTech solutions. The pandemic may have come with a lot of losses for markets and industries in the world, but the FinTech sector seems to have landed on its feet and is even expected to take off in the coming years.