Global tech giants, including Meta, are laying off workers massively. The flow of funding has dried up. Capital remains available, however. EY records 735 fundraisings (-6%) by French start-ups in 2022, for an amount of 13.5 billion euros (+17%).
In the finance sector, however, the trend is downward. This is one of the conclusions of the second Fintech100 Awards. French fintechs and insurtechs, 60% focused on B to B, raised less (-63%) last year: 1.1 billion euros.
More customer relationship and less AI
However, this decline comes after “two particularly euphoric years”. The current context is radically different and certainly more one of euphoria, but of uncertainty. The result is “a contraction of credit” and “less access to liquidity”.
However, for the authors of the Fintech100, other indicators should be taken into account, including the growth in turnover of these start-ups during this period. So, “the sector’s results demonstrate solid fundamentals and confirmed attractiveness”.
The decline in funding primarily penalizes start-ups that have not yet raised funds. The others have taken advantage of the steady flow of capital during the previous two years.
Thus, among the members of the French ranking, the growth in activity reaches 80% in 2022. Another sign of good health for technology companies in finance and insurance, their workforce has increased by 37%.
The crisis context has many consequences, however, for start-ups and their customers, and therefore on the expertise developed. The study observes a “refocusing of activities on customer service”.
The need for ROI
In addition, a third of fintechs rely primarily on software development. In 2021, artificial intelligence was a strong lever (25%). This share is down 7 points to 18%. For Truffle Capital, these developments highlight “a new necessity”.
Thus, “the business models of start-ups must be based more on the return on investment”. To fuel this ROI, fintechs invest heavily in R&D, i.e. more than a third of their turnover for 37% of them.
This is double the level seen in the software industry. It should be noted that these investments relate more particularly to payment technologies. It is true that this payment segment brings together 23% of players – that’s 9 points more in one year.
Payment “is the first activity of the sector”. This assessment is explained by “an ease of integration of applications, which accelerates the adoption process”. On the side of insurtech, the second segment, it “is also gaining momentum thanks to a volume of business in constant progression”.
In 2023, fintechs and insurtechs are generally optimistic. More than 80% of them anticipate growth of more than 30%. They maintain this forecast for 2024. To achieve this, however, they will have to take care of their competitiveness when hiring. However, competition is fierce against the big players in tech – even if they are currently laying off workers.