From FT Alphaville:
Last week, German fintech N26 announced it had raised another $170m in its latest funding round, taking its total investment to date to more than $680m, according to Crunchbase, and elevating its valuation to a lofty $3.5bn. That’s for a company that says “profitability is not one of our core metrics”, and whose annual revenue is estimated to be around $17.5m (a healthy price-to-sales ratio of... 200).....MUCH MORE
In the coming months, London-based Revolut — which has already raised almost $340m over 12 rounds — hopes to raise another half a billion dollars, which reportedly will give the company a valuation of more than $5bn. That’s for a company that not only isn’t making any profits, but also has been through a series of embarrassments and controversies in recent months, including having to admit that it had “erroneously” switched off a system for flagging potential money-laundering for several months last year, and being investigated for false advertising.
And will it soon be time for the exit door for four-year-old Revolut? Not so much. CEO Nikolay Storonsky has said he wants the firm to reach a valuation of between $20bn and $40bn before floating on the stock market.
That might not be that difficult. We’ve just had a record quarter for venture capital investment into European tech, with more than $10bn ploughed into the continent’s start-ups between March and June, according to Dealroom, and four $500m-plus fundraising rounds, which included Alphaville favourite Deliveroo and, erm, Alphaville favourite Greensill.
So all good, right? This is what a thriving European tech ecosystem should look like surely? Yes, the US is still way ahead — and so is Asia — but VCs are finally investing proper money into Europe, and start-ups are lapping it up. What’s not to like?
Take a look at this graph, drawn up by Magister Advisors, a specialist tech merchant bank. It shows the number of mid-to-high-tier ($25m-500m) fundraising rounds for European “tech-enabled companies” — ie companies whose core business relies on the internet — since 2013, versus the number of mid-to-high-tier exits (the graph does not include N26’s latest round, nor of course Revolut’s upcoming raise):...
