An Analysis of Nordic FinTech Investments

Next up in our series of vertical investment analyses is FinTech, a sector that has demanded to be considered one of the Nordic’s most important verticals in the last 12-18 months due to the sheer number of investments it has been seeing.

These investments grew slowly but surely throughout 2016 indicating that this is a vertical that could well still be on the rise in the region, with Q4 2016 the strongest quarter of the year, and recording similar numbers that the whole of 2014 and 2015 saw, clearly demonstrating the dramatic growth Nordic FinTech investments has undertaken in the last couple of years.

There’s no doubting that Sweden, and Stockholm in particular is the dominant FinTech hub in the region, in fact, it is rightly considered as one of Europe’s main FinTech hubs now.

However, in terms of the % of total investments that FinTech investments make up, Denmark actually comes out on top here, with Fintech an increasingly important vertical to the Danish (and Copenhagen) startup ecosystems. This is in part driven by a number of very deliberate initiatives to put Copenhagen on the map as a FinTech hub, not least through Copenhagen FinTech.

Surprisingly though, the capital invested into Sweden’s and Denmark’s FinTech startups didn’t make much of a mark on their total capital received (although we have to consider Spotify’s and Unity’s rounds respectively in this).

While Sweden has Klarna and iZettle, Denmark has yet to see its first breakthrough FinTech success and this is reflected in the rather small investments that were made into a number of early-stage Danish FinTech startups.

Meanwhile, Five Degrees and Meniga’s investments contributed to nearly 40% of the total capital invested into Iceland last year.

By far, the most action in investment is happening in the $1-3 million size range, with the Nordics blessed in a number of promising seed-stage FinTech companies right now, with a good proportion of these expected to push on in 2017 and beyond, meaning we will likely see increased activity at the later stage.

There were just two investments larger than $20 million in 2016, however, 2017 has already seen iZettle raise another $50 million+, and we’d expect more of these $20 million+ investments to follow soon as the Nordic FinTech scene continues to mature.

In what is easily the most interesting stat in this whole analysis, FinTech capital has gone from representing 32% in 2014 to “just” 6.9% in 2016, despite the dramatic increase in investments.

One of the reasons for this is that 2015 and 2016 included monster rounds from Spotify which skewed the numbers, however, the more nuanced reason is that while 2014 saw big rounds from iZettle and Klarna, we have not seen a Nordic FinTech company come close to what they’ve raised since. This is because the Nordics (particularly these two companies) were fast-movers in the market, and in general the scene is still at an early-stage, although with the companies we now see coming through at the seed stage, we can expect FinTech capital to increase dramatically this year.

The same applies to the number of investments, we’d also expect to see an increase here in 2017, although not as dramatic as the increase from 2015 to 2016, when the Nordic FinTech scene officially exploded.

This chart also presses home that 2014 was a vintage year for Nordic FinTech, way before it was fashionable, making the biggest dent of the total investments out of any of the years, including 2016. Even still, it’s clear that FinTech should still be considered a rising investment trend in the Nordics currently.

Unsurprisingly, a lot of the most well-known investors in the region are actively investing into Nordic FinTech startups, with NFT Ventures, Industrifonden, Northzone, Almi Invest, Seed Capital and Collector all particularly worthy of a mention as some of the most active in this space.

With infrastructure and specific community initiatives continuing to support FinTech startups across the Nordics, we fully expect FinTech to continue to merit now being classed as one of the Nordics specialist verticals, with the capital continuing to back this up.

Neil S W Murray founded The Nordic Web in 2014 in order to provide the Nordics with the quality coverage it deserves. As well as being Founding Editor of The Nordic Web, Neil is also an active community builder in the region, participating in a number of initiatives, and has previously worked for