Category: Europe

  • Scalable Capital’s US$175 Million Raise: Is Europe’s Invest-Tech Winter Over?

    Scalable Capital’s US$175 Million Raise: Is Europe’s Invest-Tech Winter Over?

    On 3 June, the Munich-based digital investment platform Scalable Capital announced its largest financing to date: €155 million ≈ US$175 million, led by Belgian listed investor Sofina and growth-equity shop Noteus Partners, with repeat cheques from Balderton Capital, Tencent and HV Capital. The round lifts Scalable’s cumulative funding to more than US$535 million and comes less than 18 months after a flat, €60 million top-up that had implied a US$1.4 billion valuation.

    Funding of that size for a late-stage fintech would have been routine in 2021. In 2024 it was rare; in 2025 it looks like a signal that public-market gloom around brokerage apps is easing and that “invest-tech” may be back in VC favour. CB Insights’ Q1 report already logged a 31% quarter-on-quarter increase in global fintech investment, driven mostly by big AI and crypto rounds, but digital-wealth plays were conspicuous by their absence.

    Scalable’s latest funding round defies the current fintech slowdown—raising the question: is the blend of brokerage and robo-advisory once again the hot corner of European fintech?

    A Bigger War Chest, a Broader Product

    Scalable’s own news release stresses platform breadth, not user growth. In December, the company unveiled a vertically integrated stack that lets it open and custody brokerage accounts in-house rather than through Baader Bank, while also launching a retail exchange (European Investor Exchange) and high-yield cash accounts paying 3.25% (variable) on idle balances. The new capital, management says, will bankroll:

    • Geographic expansion beyond its six-country footprint (Germany, Austria, France, Italy, Spain, Netherlands), targeting Poland and the Nordics next;
    • Deeper fixed-income and private-markets products, including European-style ELTIF funds and fractional bond ladders;
    • Further build-out of its own clearing and settlement rails so it can shave per-trade costs and maintain zero-commission pricing even as ESMA’s retail-investor rulebook tightens.

    No valuation was disclosed, but investors close to the deal tell FinTech Futures it priced at a “modest step-up” from 2023’s $1.4 billion round. (techcrunch.com) In today’s market, a step-up at all counts as momentum.

    Why Sofina and Noteus Opened Their Wallets

    Both lead investors are pan-European growth specialists hunting for asset-light platforms that turn retail flow into recurring fees. Sofina’s public statements cite Scalable’s “blend of brokerage margin, subscription income, and AUM-based fees,” a mix that cushions the revenue hit when equity trading slows. Noteus Partners, meanwhile, manages money for family offices worried that negative stock-bond correlations may not hold in the next cycle; a multi-asset robo allocator is one way to democratise that hedge.

    More tangibly, Scalable controls €20 billion+ in client assets, split roughly 60/40 between self-directed brokerage and managed portfolios, according to investor slides seen by Finovate. Assets rose 45% year-on-year despite the worst European equity slump since 2020—a proof-point that the firm can capture inflows even in risk-off markets. That growth, investors reckon, positions Scalable to tap Germany’s looming €1 trillion Riester-pension reform opportunity and the UK-style “pension megafund” discussions now taking root in Brussels (reuters.com).

    The Competitive Chessboard

    Europe’s invest-tech arena has three broad factions:

    FactionExamplesMoat & Pressure Points
    Zero-commission mobile brokersTrade Republic, Freetrade, Bitpanda StocksUser acquisition via price; pressure from EU ban on PFOF and thin per-trade margins
    Robo-advisersMoneyfarm, Nutmeg (J.P. Morgan), Raisin InvestAsset-based fees; need scale for operating leverage; banks buying them out
    Hybrid “super-brokers”Scalable Capital, eToro Money, Revolut WealthMultiple revenue levers, own clearing tech; must juggle regulatory regimes and compliance spend

    Scalable lives in the third column. By blending subscription brokerage (PRIME at €4.99/month), a robo advisory fee, and now interest spread on cash, it claims greater revenue resilience than single-product rivals. With the new capital it also becomes the best-funded pureplay in the bloc; Trade Republic’s last raise was a $250 million round in 2022 at a $5 billion valuation.

    The Macro Tailwind—and the Caveats

    Two macro trends favour invest-tech.

    1. Rate-driven savings migration. ECB policy kept deposit rates near zero for a decade. As cash yields rose in 2023-24, German savers—who hold €3 trillion in sight deposits—started shopping for higher returns. Scalable’s 3.25% cash pot forward-swept to partner banks captures that flow while cross-selling ETF savings plans.
    2. Retirement-system reform. Germany, France and Spain are all nudging households from defined-benefit pensions to self-funded pillars. Digital platforms with fractional ETFs and low entry tickets stand to win.

    But headwinds loom:

    • ESMA’s retail-investor strategy could cap gamified push notifications, restrict margin lending to novices and clamp down on best-execution disclosure—rules that raise compliance cost.
    • IPO drought. Without lucrative listings, retail excitement wanes; order flow tilts toward passive ETF buys, which pay thinner internalisation spreads.
    • Competitive interest accounts. Banks like Standard Chartered are plumbing 3% retail rates via app-only deposits; Scalable’s cash yield must stay ahead without eroding net-interest income.

    Why This Round Signals a Funding Thaw

    The simplest reason: size and late-stage appetite. Most European fintech cheques over US$150 million in 2025 targeted infra-rails or AI. A consumer-facing broker raising that number suggests LPs believe in public-markets rebound by 2026 and in a forthcoming IPO window.

    Second, Scalable’s raise came days after Berlin robo adviser N26 Invest launched a beta—proof that big fintechs are re-entering wealth, not exiting. Money20/20 Europe panels last week buzzed with “trading super-app” talk, reflecting renewed optimism that wealth modules can cross-sell beyond payment wallets.

    Third, valuations appear rational. A “modest step-up” from $1.4 billion suggests perhaps $1.8-$2.0 billion—two to three times projected 2025 revenue. (finance.yahoo.com) That is far below 2021’s 20× multiples and therefore more defensible when IPO windows open.

    What to Watch Next

    1. Passporting into the UK. Scalable has hinted at leveraging its MiFID licence plus a UK subsidiary to crack the world’s third-largest ETF market. Post-Brexit equivalence remains tricky, but if it pulls it off, the revenue mix tilts further to subscription margin.
    2. Own exchange volumes. The European Investor Exchange is meant to route retail orders internally and capture spread. Monthly volume disclosures will reveal if that in-house model can wean Scalable off third-party venues.
    3. Private-markets uptake. ELTIF 2.0 rules (live January 2024) let platforms sell private-equity funds to retail. The first-year take-up will show if Europe’s mass affluent truly want alternatives at €100-ticket size.
    4. Exit chatter. Balderton and HV Capital have been in Scalable since its 2016 seed. Another two-year hold after this round would line up an exit in late 2027—coincidentally when ECB rate cuts may have run their course and IPO markets normalise.

    Bottom Line

    A single funding round doesn’t define a trend, but Scalable Capital’s US$175 million proves capital is again available for consumer wealth tech—if the unit economics mix brokerage, advice and cash yield in one vertically integrated stack.

    Europe’s invest-tech winter is not yet spring; trading volumes remain soft and regulatory clouds persist. Yet investors who sat out 2024’s markdowns are edging back, betting that households shifting trillions from 0% deposits to diversified portfolios will fuel the next growth wave.

    If that thesis sticks, Scalable’s cheque will be the opening bell for a fresh funding cycle; if not, it will mark the high-water line before consolidation. Either way, 2025 will tell us whether digital investing in Europe has moved from speculative frenzy to sustainable, cash-generating finance—and whether “super-broker” really is the business model that finally unifies savings, trading and advisory under one app.

  • ECB Opens Digital Euro Sandbox to 70 Companies

    ECB Opens Digital Euro Sandbox to 70 Companies

    When the European Central Bank (ECB) first pitched a “digital euro” back in 2020, sceptics complained the project lived inside a lab no merchant or fintech could ever see. That complaint ended on 5 May 2025, when ECB opened a digital-euro innovation platform and quietly emailed access keys to about 70 external organisations – supermarkets, mass-transit operators, neo-banks, card schemes, even a US Big-Tech wallet – chosen from more than 100 applicants.

    The platform is not a marketing stunt; it is a “mini-Europe in the cloud.” Participants receive an SDK, sandbox settlement nodes and a 200-page rulebook that simulates identity checks, offline transfers, fee logic and privacy thresholds. The brief is brutal: “Break things, find frictions, propose fixes, and report back by December.”

    Politics on a stopwatch

    Law-makers are still haggling over the Digital-Euro Regulation, yet the ECB is sprinting ahead. Board member Piero Cipollone told Reuters he hopes for a political deal “by early 2026,” after which a public launch would need two to three years. By pushing the tech into public view now, the Eurosystem signals the project is no longer “if” but “when” – and that the code will be battle-tested before politicians finish their fight.

    How the plumbing is laid out

    Ledger Insights obtained early documentation that sketches a three-layer stack:

    1. Core settlement, run by the Eurosystem, handles finality in central-bank money;
    2. Intermediary layer, where banks and PSPs hold customer accounts or wallets under a harmonised rulebook;
    3. Value-added layer, open to anyone who wants to bolt on cashback, credit, loyalty or IoT triggers.

    Two wallet flavours co-exist. Account-based wallets live at a PSP and work online; bearer wallets reside in a secure element or hardware card and can spend offline up to a €300 limit (the threshold still floats in the legislative draft, but €300 is the ECB’s test setting). Larger top-ups must flow through KYC rails and are logged for AML monitoring.

    Who is inside the sandbox?

    Names are under NDA, but Global Government Fintech confirmed a French grocery chain, a Baltic rail operator, three neo-banks and at least one US payment wallet are in the cohort. A transit operator will test tap-in/tap-out with automatic delay refunds; a subscription platform will prototype the EU’s “right-to-withdraw” by sending instant refunds back to a consumer’s wallet if they cancel within 14 days – use-cases the ECB itself highlighted in a recent speech.

    What the ECB wants to learn

    • Integration latency: can a Tallinn fintech plug the SDK into its app in weeks, not quarters?
    • Hardware costs: will a supermarket in Seville need new terminals, or can the existing NFC readers treat the digital euro like another EMV token?
    • Offline realism: can a wallet-to-chip transfer clear when both phones have zero signal inside a Pyrenees ski tunnel?

    Those answers feed directly into the final legislative debate. If merchants prove the digital euro lands with zero scheme fees and no terminal upgrades, lobbyists will have a tougher time calling it “expensive.” If offline transfers glitch, privacy hawks may demand higher limits to keep the CBDC as cash-like as possible.

    Fee fight déjà vu

    Officially, the ECB says merchant fees should be “no higher than today’s most efficient digital means” (read: SEPA instant, which is near-free). Yet intermediaries are allowed to levy charges for optional extras. Expect a tug-of-war reminiscent of SEPA’s interchange cap fights: merchants will want a zero-fee rail, PSPs will argue they need revenue to cover AML, fraud and tokenisation costs. The platform lets both sides run the numbers before the Eurogroup decides whether to legislate a hard cap.

    Deposit drain or digital shield?

    European bankers fear a runaway CBDC could hoover up deposits and jack up funding costs. One Italian trade group told La Repubblica the digital euro might “cost the industry €880 million a year in lost float”. The ECB counters with tiered remuneration: small balances earn zero or tiny interest to keep them cash-like; larger balances could earn less than a savings account, discouraging hoarding. Those dials can be tuned in the sandbox.

    A blockchain hedge – but conventional at core

    Purists may be disappointed: the prototype settlement engine is classic RTGS, not a public blockchain. Distributed-ledger tech appears only in the value-added layer, where participants can tokenise point-of-sale rewards or NFTs if they see fit. That conservative stance contrasts with the BIS Innovation Hub’s freshly launched Project Pine, which tokenises green bonds entirely on smart contracts. The ECB’s message is pragmatic: get resilience and interoperability first; slide in cool tech later if it serves a purpose.

    Why this matters outside Euroland

    If the sandbox shows a cash-like euro that clears cross-border within seconds and costs merchants pennies, pressure ratchets up on other CBDC projects: the Fed (still “studying”), the Bank of England (consultation phase) and big emerging-market pilots like India’s e-rupee. Big-Tech wallets face a strategic fork: integrate the digital euro or risk losing 350 million customers to a sovereign wallet embedded in every banking app.

    Stable-coin players are watching, too. Circle’s new Circle Payments Network touts USDC settlement in 30 seconds for a tenth of a card fee; Visa just answered by piggy-backing Banking Circle’s local-clearing memberships, extending Visa Direct’s instant map without touching crypto. The digital euro’s sandbox gives Brussels a chance to set a usability bar that private tokens must clear to stay relevant.

    Frictions looming on the horizon

    Legislators must still decide how much anonymity is “cash-like enough.” The draft allows bearer wallets up to €300 and offline transfers up to €1000 a month, but civil-liberty NGOs already call that “panopticon lite.” Payment-aggregator lobbies want holding limits above €3000 so consumers don’t juggle multiple wallets—one Ledger Insights survey found 27 percent of respondents would park some of a €10 000 windfall in a digital euro if limits rose. Politicians will weigh those numbers against bank-funding fears.

    A second friction is interoperability with existing instant rails. SEPA Instant processes euro transfers in <10 seconds, but uses commercial-bank money. If the digital euro clears in one second but triggers complex AML disclosures for a €25 dinner, PSPs could steer merchants back to cards or wallets. The sandbox is the only safe space to find those pain points before real users revolt.

    What happens next?

    Participants must deliver technical reports by December. The ECB will then publish a public “lessons learned” and hand the thick dossier to legislators who will finalise the Digital-Euro Act. If Brussels reaches Cipollone’s early-2026 deadline, the Eurosystem could green-light a production build in Q4 2026 and start rolling out wallets in 2028—just in time for the next EU budget cycle and, perhaps, before FedNow’s real uptake among US consumers eclipses card share.

    For now, the sandbox is live, the NDA signatures are dry, and 70 firms have a brief to try and break the ECB’s dream money before hackers and speculators get the chance. The sooner they break it, the smoother Europe’s first digital cash could land in our phones—and the less likely it is to blow up under the weight of 340 million users tapping “Pay.”

  • Digital Euro déjà vu: Europe’s fast-tracked CBDC e-cash still lacks believers

    Digital Euro déjà vu: Europe’s fast-tracked CBDC e-cash still lacks believers

    European Central Bank board member Piero Cipollone was back on the wires last Thursday promising that “by early 2026” politicians will have nailed down the legislation for their CBDC: a digital euro – news framed as a decisive push after months of drift.

    On paper the goal is bold: finish parliamentary wrangling, publish the rulebook and leave officials just “two to three years” to ship a retail wallet. In practice the announcement felt like the latest rerun of a show that keeps changing its finale date while half the audience slips out for coffee.

    A deadline in search of demand

    Lawmakers are dragging their feet for a reason. A January Reuters deep-dive revealed that many parliamentarians and commercial bankers remain unconvinced the project solves an actual consumer problem and fear it could divert deposits from an already fragile banking system. The ECB tries to mollify them with low holding caps, but that only shrinks the digital euro’s practical use-case: if citizens can park just a couple of thousand euros, why switch from the card or mobile-banking app they already trust?

    Consumers seem to agree. A 17-country survey published by the ECB in March found that 58 percent of respondents who had just watched an explainer video still said it was “unlikely or very unlikely” they would use a digital euro for everyday retail payments; in the control group that scepticism jumped to 69 percent. When asked why, 43 percent answered simply: I prefer other payment methods. Habit may be hard to break, but those numbers suggest indifference, not ignorance, is the main obstacle.

    Payments déjà vu all over again

    Proponents argue the euro area needs sovereign e-cash to avoid dependence on U.S. card giants and, now, dollar-backed stablecoins encouraged by President Trump. Yet the region already boasts SEPA Instant Credit, domestic card schemes such as France’s Carte Bancaire and a flourishing patchwork of mobile wallets. These rails may be fragmented but they work, and fees on intra-EU retail payments are already among the lowest in the G-20. The digital euro, by contrast, still lacks a settled business model for intermediaries and would arrive just as banks spend billions upgrading to ISO 20022 and faster payments anyway.

    Political will versus political risk

    Cipollone’s 2026 deadline is meant to light a fire under the European Parliament and Council, but politics cuts both ways. Elections loom in Germany and Spain, where right-of-centre parties routinely frame the digital euro as a privacy hazard in the making. Brussels insists transaction data will be pseudonymised and kept off ECB servers, yet the public-consultation cycle that closed in 2021 showed privacy was by far the top concern – outranking cyber-security, offline access or smart-contract features. Months later that sentiment has not budged.

    Bank lobbying is louder still. The European Banking Federation warns that a risk-free ECB wallet could drain as much as 15 percent of retail deposits in a crisis, raising funding costs just when margins are already compressed by six straight rate cuts. Supervisors say holding caps and tiered remuneration will mitigate flight, but the optics of a state-run product cannibalising the private sector are politically poisonous in Berlin and Rome.

    Tech ambitions meet user inertia

    Even if the legal framework passes, engineering a product that people actually choose is another matter. The ECB promises near-cash privacy for offline transactions, but QR payments and NFC taps are already universal. It touts programmable payments for e-commerce, yet merchants can add conditional triggers to SEPA Instant today. And while cross-border settlement could be cheaper on a multi-CBDC corridor, the digital euro is retail-only – wholesale pilots remain a separate discussion.

    History suggests adoption hinges on convenience, not ideology: Swedes embraced Swish because it made splitting a lunch bill painless; mainland Chinese flocked to Alipay because it bundled payments with shopping. By comparison, a digital euro that purposefully limits balances, earns no interest and requires yet another app may feel like less than what consumers already have, not more.

    The road to 2026 – or another extension?

    For now, Brussels is signalling urgency, but the parliamentary docket is crowded with defence funds and green-industrial policy. Lobbyists whisper that even if a first-reading agreement sneaks through this year, national capitals could still stall in the Council, stretching Cipollone’s early-2026 target into a new “ambitious but realistic” horizon.

    Scepticism is healthy; so is honesty. Europe absolutely needs resilient, home-grown payment infrastructure. What is not yet clear is whether a retail CBDC – especially one constrained to avoid rocking the banking boat – is the mechanism consumers or merchants actually want. Until that demand story firms up, the digital euro risks becoming the monetary equivalent of Europe’s space plane projects: technically intriguing, strategically appealing, but always five years from commercial lift-off.

    I’ll keep watching the legislative ticker – and the opinion polls. Wake me when more Europeans want a digital euro than a latte with their contactless card.