FRANCE Law and Practice Contributed by: Hubert de Vauplane and Hugo Bordet, Morgan Lewis & Bockius LLP
Beyond the Crypto Space The post-pandemic period, accompanied by ris - ing interest rates and geopolitical uncertainties, has posed significant challenges to many fin - techs, and notably neobanks. Among the actors that shut down are Morning, C-zam, Ditto Bank, Boon and Pumpkin. However, other actors have thrived thanks to the transition to online and mobile banking. Qonto and Lydia have gained significant market share, and other B2B fintechs such as Treezor and Lemonway have established themselves as strategic partners for many smaller start-ups. In 2024, the French fintech Pluxee successfully completed an IPO, marking a significant mile - stone for the sector. This trend is expected to continue in 2025, with other fintech companies anticipating similar moves to access financial markets. On the other hand, since the end of 2022, crowd - funding has experienced a downward trend, with the amount of funds raised dropping from EUR2.3 billion in 2022 to EUR1.7 billion in 2024. Several factors explain this decline, including the implementation of the requirement for crowd - funding service providers to obtain approval, as well as the prolonged real estate crisis, which has hindered investment in this sector. 2. Fintech Business Models and Regulation in General 2.1 Predominant Business Models French fintech companies cover a wide range of business models: mobile payment apps, group gifting/personal fundraising apps, bank account aggregators and personal finance apps, neobanks, banking-as-a-service platforms,
cerning trend: two French fintechs have moved their headquarters to the USA, raising concerns about the attractiveness of the French and Euro - pean markets. In 2024, fundraising picked up again to reach a total of EUR1.3 billion in France, according to the latest report from France FinTech, the trade association for French fintech. This is an increase of 28% compared to 2023. This figure places France in second place among fintech ecosys - tems on the European continent, just behind the UK, which has raised a total of EUR2.8 billion. Germany is just behind France with EUR874 mil - lion raised, an increase of 9%. Switzerland is in fourth position, followed by Spain, Sweden and then the Netherlands, with much lower amounts, under EUR250 million. France has recorded the biggest increase in fundraising, and start-ups are increasingly targeting the markets of their European neighbours. France FinTech issued in December 2024 a global review of the situation in the French mar - ket. The document is available on the France FinTech website. By the end of 2024, one in three French fintechs will have already reached break-even, accord - ing to the annual report of France FinTech. The association, representing the French fintech ecosystem, has a total of 1,145 companies. Of these, 40% are considered “young shoots” with less than three years of existence. 46% are “start-ups” in the Series A stage and employ fewer than 50 people. 12% of the companies identified by France FinTech fall into the “scale- up” category, meaning that they have a viable business model and a strong increase in market share and/or turnover. Finally, 2% are unicorns.
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