The Role of Migrant Entrepreneurship in European Fintech Ventures

Abstract

Recent reports have revealed evidence that companies founded on an ethnic diversity basis produce services that cater more to ethnic minorities and are more likely to outperform their peers. Considering the increased ethnic diversity in Fintech entrepreneurship and the higher need of basic financial services for financially excluded minorities, we empirically examine the effect of migrant entrepreneurship on Fintech firms’ success in Europe. From a resource-based perspective, we argue that migrant entrepreneurs seem to impact venture capital (VC) funding and post-VC performance of Fintech as they bring with them their unique personal and ethnic resources and tend to model their solutions around who and what they know. Our findings show that migrant Fintech entrepreneurs deploy their resources to have more funds and maximize asset performance outcomes but that does not necessarily transform into higher outcomes for investors. Practitioners can apply the lessons to enhance migrant polices that support future Fintech entrepreneurship in order to better integrate incoming foreign tech skills and mitigate financial exclusion faced by ethnic minorities in Europe.

Keywords: Migrant entrepreneurship; cognitive resource; human capital; Fintech; Venture Capital; Europe; Firm Performance

JEL Classification: L26, G41, G24