London-based Modulr, a digital alternative to commercial and wholesale transaction banking, raises €21.3M led by Highland Europe
Charlotte Tucker / EU-Startups :
Context & Ripple Effects
Modulr's €21.3M round led by Highland Europe is the second step in a funding arc the coverage traces clearly: a year earlier it raised a £14M round led by Frog Capital on its Payments-as-a-Service API platform, and two years later it would scale to a $108M Series C led by General Atlantic. This 2020 raise sits between those milestones, arriving just as COVID-era digitization pushed businesses toward embedding payments rather than building bank relationships from scratch.
The round also lands inside a London fintech cluster that was raising steadily through the period — PrimaryBid's €42.3M Series B followed months later, and Divido drew HSBC and ING as lead investors in 2021 — making Modulr part of a broader pattern of institutional money backing API-layer financial infrastructure out of the city.
First-order effects
- Highland Europe takes the lead-investor seat previously held by Frog Capital, giving Modulr fresh capital to expand its transaction-banking alternative for commercial and wholesale clients during a period when digital payment volumes were surging.
- Digital businesses using Modulr's API gain a better-capitalized provider at exactly the moment their own customers were shifting spend online, tightening the platform's fit with demand.
Second-order effects
- Incumbent commercial and wholesale banks face a competitor that sells payments as embeddable infrastructure rather than as an account relationship, pressuring them to open their own APIs or lose the integration layer to specialists.
- Other London-based fintech infrastructure firms like PrimaryBid and Divido now compete for the same later-stage investors Highland Europe represents, raising the bar for what growth-stage European payments rounds must show.
Third-order effects
- If the trajectory holds — from £14M in 2019 to $108M by 2022 — payments infrastructure consolidates around a small set of API platforms that sit between businesses and banks, shifting pricing power toward whoever owns the integration layer.
- The pattern reinforces London's position as Europe's leading tech hub per Dealroom's ranking, with financial infrastructure as one of its anchor categories attracting successive US-led growth rounds.
The trend: Payments are moving from bank-held relationships to API-delivered infrastructure, with specialist platforms like Modulr scaling through successive larger rounds while incumbent banks cede the integration layer.