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Fintech startups need to cut their valuations and pursue M&A, says leading fintech entrepreneur

Rafal Andzejevski is a leading fintech entrepreneur and founder at PayAlly

PayAlly founder and CEO Rafal Andzejevski has urged London fintech corporations to embrace M&A offers amid the VC funding hunch.

The VC increase within the fintech sector is quick drawing to an in depth and buyers are already beginning to tighten their purse strings.”

— Rafal Andzejevski

LONDON, UNITED KINGDOM, June 28, 2023/ — Leading fintech entrepreneur Rafal Andzejevski has at present known as on London fintech corporations to embrace M&A offers to keep away from going bust forward of a forecasted enterprise capital funding hunch.

Rafal’s announcement comes amid current knowledge from Pitchbook, indicating {that a} enterprise capital downturn is coming. In Q1, VC deal depend for Europe’s fintech startups reached its lowest quarterly determine in virtually 5 years, with solely 228 rounds price a cumulative €3 billion.

The founding father of London-based monetary providers supplier PayAlly argues that fintech corporations are holding onto “frothy valuations” price extra that the intrinsic worth of the corporate. He warns that these corporations are too reliant on VC funding and will go bankrupt in the event that they don’t promote themselves off, presumably triggering severe contagion out there.

Rafal Andzejevski mentioned: “Revolut’s valuation dropped by 46 p.c from the tip of 2021 to the identical time in 2022. This has already despatched shockwaves by way of the market and needs to be seen as a serious warning signal by different fintech corporations.

“The VC increase within the fintech sector is quick drawing to an in depth and buyers are already beginning to tighten their purse strings.”

Andzejevski maintains that the sector ought to as a substitute embrace mergers and acquisitions to climate uncertainty. Such offers are on the rise within the UK, with current knowledge from White & Case indicating a 13% rise in transactions in Q1 2023 over the earlier quarter. The entrepreneur is assured that M&A will deliver a lot wanted stability to the market and assist place fintech startups for long run development.

In April 2023, financial savings startup Acorns acquired London-based GoHenry, a banking startup for kids. At a time when startups have discovered it troublesome to safe additional funding, the deal has given Acorns a chance to develop internationally, beginning with GoHenry’s present footprint throughout the U.Ok., France, Spain and Italy.

Rafal Andzejevski mentioned: “The London fintech sector wants extra M&As. An IPO isn’t the one measure of success, and M&As worth corporations for their intrinsic worth, quite than the overinflated valuations spurred on by VC. It’s time fintech corporations swallow their satisfaction and promote themselves off.”

Andzejevski believes that M&A offers allow companies with a novel USP to scale organically, whereas exposing weaker gamers out there.

Rafal Andzejevski mentioned: “M&As are typically thought of a grimy phrase within the sector, however they’ll really herald many advantages. Companies can leverage similarities in skilled expertise and shopper bases, and enhance their market share. All of the whereas, VC funded startups are burning by way of their budgets on fancy advertising and marketing campaigns, quite than specializing in how they’re really going to break even.

“Entrepreneurs are delay M&A discussions as a result of it means they may have to settle for a decrease valuation. However promoting themselves off for what they’re really price will solely assist them in the long term. If fintech corporations have a novel, fascinating product within the first place, then they’re already poised for long-term development. It’s that straightforward. In case you don’t have a very good product and make investments your capital properly – you’ll fail.”


Marcus Goldsmith
+44 20 8064 1829


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