Solarisbank, the Berlin-based embedded fintech company, has raised $224 million in a Series D funding round that was led by Decisive Capital Management and had other investors like Pathway Capital Management CNP and others participating.
Embedded finance, the industry that makes APIs that wrap banking functions under a single umbrella that can be used by banks and financial services companies, has been seeing some tremendous growth and investor interest of late. There have been numerous startups that have been gaining a lot of funding while working in this space. The need for bringing all the banks together under a single umbrella is being felt now more than ever and this is a special need in regions like Europe where many countries are considered as one region but the banks in each country work in very different ways making it difficult for businesses to deal with them.
“Europe is an ideal space for us to work in,” said CEO Roland Folz. “We believe that in Europe there are roughly 800 million bank accounts and some 400 million of those will change ‘ownership,’ where traditional banks will be swapped out with non-traditional banks. … If we look at the five- to 10-year perspective, we want to make sure a significant proportion of those accounts will be on our platform.”
The size of the market for such services in Europe is very large and hence there is a large competition among startups to acquire these users and customers. The company has also announced the acquisition of its competitor Contis which is also an emerging trend where bigger companies have been aggressively buying out the smaller competition in this space to consolidate the industry,
The company has basically increased its valuation to $1.65 billion which is 5 times more than its valuation in Series D funding last year when it had raised $67.5 million. The company has said that it has been growing 40%-60% annually and has more than 2 million user accounts. Contis also has a large user base on its own with 2 million user accounts as well and hence this acquisition should consolidate the position of Solarisbank strongly in the long run.
With many competitors in this space, the one which can expand quickly across different regions is likely to have a big advantage and the company hopes that the fact that it holds regulation and licenses in many regions should help it to grow quickly in the coming months.