In contrast to other financial centers in Germany, fintech startups in Berlin are heavily oriented towards customer oriented B2C products, and there are many examples of well funded B2C fintech startups in the German capital. Let us take a look at the 5 best-funded fintech startups in Berlin which received the most funding in 2018.
What is fintech?
Fintech (‘financial technology’) has a long history starting in 1865 in France. Today’s fintech industry has developed in light of the financial crisis which took place about ten years ago. Many mega banks collapsed and customers were expected to flee for smaller competitors. As a consequence, it became obvious that the financial markets were missing out on alternatives for the tumbling big giants in the area of consumer banking.
Now venture capitalists invest increasing amounts into the new so-called ‘neo banks’. These new players have been inspired mainly by the idea of doing things better than the big players, who kept the wold in suspense with their nonperforming loans. An effect that plays into their hands is the new generation of customers who are more comfortable with online banking via smartphone. The construction of a network of physical branches is no longer necessary, which accelerates the development process of the up and coming fintech startups.
N26: Bringing banking to your mobile phone
Berlin is home to a vibrant startup scene offering numerous coworking spaces, but it would be fair to say that it is not usually cited as a major center for the financial industry. However, the German capital has over time become a hub for startups focused on fintech, with dozens being launched over the past few years. The first such startup would have to be the online bank N26. N26 aims to provide a seamless banking experience for its users by enabling them to access bank services using only their mobile application.
N26 will expand into the US market in 2019, and has previously announced its intention of signing up 5,000,000 users by the year 2020. It is well on its way towards meeting that goal, having raised a massive 212 million euros in five rounds of funding.
N26 was originally called Papayer when it was launched in 2013 by Maximilian Tayenthal and Valentin Stalf. The startup aims to redefine the banking sector by providing customers throughout the European Union easy access to banking services directly from a smartphone application. The N26 application has become quite popular due to its practicality, and marketing campaigns which have greatly increased N26’s brand recognition.
Smava: Helping to navigate loans
Smava was founded over a decade ago in 2007 and claims to be the first fintech startup in Berlin. It connects prospective borrowers directly with lending banks and helps users to get an overview of all the possible loans on offer in the German market. Since its founding, Smava has enabled users to take out loans collectively worth over 3 billion, with users having the possibility to save thousands in additional fees which they may incur through traditional loan channels. It has raised over 130 million euros to date from multiple investors and is also one of the largest fintech startups in Berlin with over 300 employees.
Smava users receive personalized quotes from numerous lenders and are then free to select whichever one they deem to be the most appropriate for their situation. This allows users to save both time and money when looking for loans. According to Smava, its users can save hundreds of euros compared with manually inquiring into the loan policies at numerous banks. As it has over two dozen partner institutions, Smava ensures that users receive a wide range of offers from which to choose.
Raisin: Helping investors optimize their deposits
Originally called SavingGlobal, Raisin is another fascinating fintech startup which has raised over 57 million euros since its inception in 2013. Co-founders Tamaz Georgadze, Michael Stephan and Frank Freud aimed to create a new platform to provide users with novel solutions related to investments and savings.
It achieves this by linking users with banks, in a similar manner to Smava. This simply goes to show the importance of reducing information asymmetry in the financial sector, for traditional deposit and loan marketplaces which do not enable users to quickly access and compare offers from numerous providers.
solarisBank: Helping businesses get on board
Since solarisBank was founded in 2016 by Andreas Bittner and Marko Wentin, It has raised over 95 million euros and is considered to be one of the most innovative fintech companies in Berlin. solarisBank has a banking license and is involved with enabling businesses to develop their own financial products and services to offer users.
solarisBank offers its clients the opportunity to access instant credit and online banking services, including the provision of an escrow service. This is in addition to a range of services from other providers which can be implemented on the solarisBank platform through the use of an API.
Spotcap: There to spot businesses on rainy days
Spotcap has raised over 112 million Euros since being founded by Jens Woloszczak and Toby Triebel in 2014. It aims to provide businesses with individualized financial solutions. It helps businesses, primarily SMEs, obtain easy access to a range of financing solutions such as business loans without having to invest large amounts of time. While it is yet another fintech startup geared towards providing users with access to loans, it is notable for being a B2B rather than B2C business.
Like most of the top fintech companies, Spotcap allows users to sign up and send an application online, with the option of getting in touch with their in-house financial advisers. It is possible to complete registration in five minutes and receive offers from numerous lenders. Their expressed aim is to allow business owners to meet customer demand by providing them with rapid financing options. In addition to Germany, Spotcap functions in the UK, the Netherlands, Spain, Australia, and New Zealand.
Spotcap analyzes the financial health of each small and medium-sized business which applies for credit and based on these analyses users are offered various types of financing solutions. The startup now employs dozens of people from over 20 countries and has received financial support from established players in the tech space such as the startup incubator Rocket Internet.
The Future of Fintech
The fintech space is growing rapidly in Berlin and will most certainly contribute towards global developments in the world of finance and technology. As we can see, many of the best-funded fintech startups are focused on the customer experience rather than changing the financial instruments currently in use. For example, while N26 and Smava give customers an unmatched user experience at a fraction of the cost, they provide bank accounts and loan offers respectively two services which users can also access via another longer, costlier channel. This means that the potential of the fintech industry is flourishing and will most definitely completely transform practices in the traditional financial sector. rent24 supports fintech startups and alike with the funding through an accelerator. Offering 2 million euros and six different programs for the different needs at each stage we are looking forward to a bright future of this industry.
Author: Aline Dörfert, Senior Content Manager rent24