Investments in B2B fintech will continue to outpace B2C fintech in 2023, experts say
Investments in B2B fintech in Europe to date have reached $18.5 billion in 2022, surpassing the $7.5 billion invested in B2C fintech in 2022 – and experts believe this gap could grow even more next year.
Image source: Liam Chennells, founder and CEO of Detected
The days when fintech is synonymous with sexy neobanks or the latest hyped investment app seem to be on the retreat, at least from an investment perspective.
2022 was all about the (admittedly unglamorous) world of B2B fintech, with investors plowing billions into B2B payments, B2B business software and B2B insurance – and experts believe the trend will continue next year.
In fact, investment in B2B fintech in Europe has so far dwarfed investment in B2C fintech in 2022, which experts say suffers from an innovation block.
Investment in B2B fintech in Europe to date has reached $18.5 billion in 2022, a figure that surpasses the $7.5 billion invested in B2C in 2022 (although some firms operate in B2B and B2C, so there is some double counting in these the numbers), according to PitchBook data.
Total investment in European fintech funding to date in 2022 is $21.9 billion, according to PitchBook.
Major B2B fintech investments this year include wealth management platform FNZ raising $1.4 billion; payments firm Checkout.com raises $1 billion; and B2B insurtech Wefox raises $400 million.
Experts say there are several reasons for the gap between B2B and B2C investment levels, including B2B fintech investment being more sheltered from a depressed economic climate; the natural cycle of fintech’s evolution; or simply that the more exciting technology and innovation is now in B2B fintech.
A fintech executive believes the boom in B2B fintech investment will continue in 2023, as investors see the opportunity to upgrade “slow” and “clumsy” legacy technology.
Liam Chennells, founder and CEO of Detected, which helps businesses automate verification, said: “I think people are realizing that the experience that people demand from B2C products is transferring to B2B.
“And a very good example of that is Amazon for Business, which is actually a procurement platform, but it allows people to engage with it as if it’s Amazon B2C.
“People expect in the business area to have the same experience as in the consumer area. So investors look at that and see the opportunity to upgrade all those legacy systems that feel clunky and slow and manual. So there is a real opportunity in there.”
On the recent tapering of investment in neobanks, Chennells said this trend will continue unless the neobanks can “build strong B2B or international proportions”.
He added: “I think a lot of the neobanks have realized that it was possible to build a domestic B2C proposition, but unless you can grow internationally or grow a second product line, which is the business proposition, then you’ve hit a ceiling.”
Because B2B is more sheltered compared to B2C from economic factors, he said the “right businesses will continue to invest”.
But he added that in 2023 fintech bosses would have to have a “stronger thesis” compared to 2022 to convince investors to part with their money. But he said this “correction” is a good thing.
On sectors within B2B fintech that will be hot in 2023, he cited compliance as well as B2B e-commerce which will also be a “massive growth area”.
