Sifted includes Cygnetise in its 2023 early-stage regtechs watchlist and shares its predictions for the sector
Cygnetise is recognised as one of the 33 early-stage European regtech startups to watch in 2023 by Sifted.
In July, FT-backed Sifted published their latest analysis of the European regtech market as part of their investment-grade research “Briefings” series. The briefing provides a detailed overview of the current state of the sector including:
an early-stage market map with 91 startups selected by Sifted, from pre-seed to Series A
funding trends highlighting the regional leaders and laggards in VC funding for startups operating in the sector, and some of the most notable success stories over the past couple of years
Sifted’s take on the development of the sector, their predictions for the future, and a selection of 33 of the most promising early-stage regtech startups to watch in 2023, including Cygnetise
Sifted’s regtech trends of 2023
According to the latest projections by EBA and KBV, the European regtech sector is growing at a 19.5% annual rate and will reach a market size of €18.9bn by 2025.
While fintech remains a primary sector for regtech, Sifted expects the market to expand to other core industries like health, commerce, enterprise software, and energy, while Europe is strengthening its position as one of the world’s central regtech hubs.
Down with the fintech ship: The decline in fintech has affected regtech deal-making. In the first half of 2023, only 12 fundraising rounds were noted, compared to 25 in 2022 and 30 in 2021. Quantexa, a financial crime prevention startup, was among the winners of the sector securing a hefty $153m Series D funding.
Facilitating AI: The EU’s AI Strategy of 2021 aimed to restrict certain risky AI applications like social scoring, manipulation and some instances of facial recognition. Changes in June this year mandated the disclosure of copyright-bound training data for GenAI models. Some regtechs, many powered by AI, are now working to ensure AI applications are audit-compliant.
Value is in the data: Regtechs excel in handling financial data but are not confined to it. They can manage a variety of data, from customer information to GDPR analysis. Those expanding beyond fintech may have an advantage in securing future funding. Diversifying into areas like legaltech will also be crucial for growth
Europe dominates: In 2023, European regtechs secured 50% of global funding, outpacing their US counterparts. While this dominance might wane, European tech regulations will continue to generate capital for compliance-centric startups. However, scaling remains a challenge, especially in less-regulated markets.
For Sifted, Europe's inclination towards regulation is a hallmark of its tech strategy. With its rather unusual belief that caution doesn't necessarily hinder innovation, regtech startups are keen to be proof of that by offering much more cost-effective solutions compared to full-fledged compliance teams. With weighty AI regulations on the horizon, competition is now heating up to develop the next generation of automated compliance functions.