WinYield Report Says Half of European Fintechs Might Never Attain Profitability

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A WinYield report has warned that most European fintech startups have minimal or no practical experience investing in varying credit cycles. The report noted that these startups might never attain profitability.

WinYield based its research on interviews involving around 100 fintechs in European lending markets. It noted that less than one in ten of these startups had an employee with relevant experience in the credit markets.

WinYield also analyzed the underwriting techniques used by these startups. It concluded that most involved basic analytic tools that failed to offer sufficient loan backtesting through different market conditions.

Models Used By Startups Are Lacking

The report also pointed out different methods used by fintechs that were lacking. One of the issues is that most of these fintechs overestimated their target market. It gave an example of fintechs lending on ecommerce platforms. Such loans are usually short-term and repaid quickly, significantly reducing the credit fintechs hold in their financial reports.

The founder and CEO of WinYield, Fabricio Mercier, said that a majority of European fintech startups have adopted models that are not economically viable. For instance, launching multiple products at once and using aggressive marketing techniques is unsuitable for the European market as it is for the US market.

“Many European fintech lenders are opting for the multi-product approach and the aggressive marketing budgets that are favored by their peers in the US,” Mercier said. “But this does not work in a fragmented European market where the break-even portfolio size is much too high.”

VCs Investing In Fintech Startups Face Risks

The report noted that the inadequacies of European fintech startups could have a spillover effect on the venture capitalists who have invested in these companies. VCs have invested around $550 million in these startups.

This capital might be at risk if these fintechs fail to achieve profitability. On the other hand, institutional investors might be safe because they require some form of security before offering debt capital to these startups.

If these fintechs fail to attain profitability, it could significantly threaten the entire sector. Mercier warned that the credit market is primarily driven by fear and greed. Therefore, in cases of uncertainty, this market might overreact. As such, if these fintechs fail to adjust their models, there could be a significant contagion effect.


Ali is a professional journalist with experience in Web3 journalism and marketing. Ali holds a Master's degree in Finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of leading cryptocurrency publications including, CryptoSlate,,, Business2Community, BeinCrypto, and more.