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Fenergo has scooped up $80 million in a funding round from ABN AMRO Ventures and DXC Technology — with the former investing $6 million and the latter providing the other $74 million — per the Irish Times.
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In addition to being an investor, ABN AMRO is now one of Fenergo’s 70 clients, joining firms like PNC, ANZ, UBS Asset Management, BNP Paribas, and BBVA. This round gives the startup a valuation of around $800 million.
The fresh capital will be used to develop more products, as well as for acquisitions, per TechCrunch, which can help Fenergo further boost its value proposition.
Fenergo already has a solid offering for financial institutions (FIs), but the competition is tough. The regtech offers solutions for anti-money laundering (AML) efforts, know-your-customer (KYC) processes, and client risk rating, as well as digital onboarding.
It provides services in segments including retail banking, business and commercial banking, asset management, and private banking. This gives Fenergo a large addressable market for its offerings, but it isn’t the only one looking to capitalize on the growing difficulty for FIs to comply with regulations: There are currently 146 regtechs working in compliance globally, per Deloitte, suggesting that Fenergo is facing some tough competition.
So, looking to consolidate and further broaden its product suite can help Fenergo stave off competitors. Consolidation is intensifying in the fintech space, with a number of players looking to acquire other startups to expand and enhance their product suites: Digital savings marketplace Raisin, for example, purchased Fairr to expand into pensions, while PayU acquired PaySense to enhance its lending venture.
Such acquisitions enable startups to create a stickier value proposition that can help attract more potential users and retain existing customers. And in the future, Fenergo could look into expanding its regtech offering by moving into new customer segments like insurance or by offering solutions for regulatory reporting or transaction monitoring — regtech segments that currently have fewer startups competing for market share.
Ireland’s fintech ecosystem hasn’t been investors’ focus recently, but this latest round is bucking that trend. This raise alone already beats Ireland’s total fintech funding for 2019, which stood at just $48 million and was down over 80% from $269 million in 2018, according to Innovate Finance.
However, Fenergo’s round could be more of a one-off win for Ireland’s fintech scene for the time being: Ireland has a relatively small population compared with its neighboring country, the UK, potentially making the latter a more likely investment option, especially when fintechs are targeting consumers.
Additionally, uncertainty around Brexit hasn’t shaken the investors’ confidence in the UK’s fintech industry — funding increased from $3.6 billion in 2018 to $4.9 billion last year — suggesting that not many will seek out alternative locations for investments. As such, big funding rounds like Fenergo’s will likely remain a rarity in Ireland, and those winning the funding race will likely be startups working with big corporates or on a business-to-business model.
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