"IDNow's Triumphant Journey in Schauermärchen Capital's Capital Market Combine"
In a landmark deal, Munich-based digital identity verification company IDNow was acquired by US private equity firm Corsair Capital for a staggering $300 million in March 2025. This marked the biggest exit of the year and sent ripples of excitement through the fintech scene.
Following the acquisition, IDNow continues to operate as an identity verification platform under Corsair's backing. This move indicates that Corsair is actively supporting and potentially investing in the growth and development of IDNow's services in the digital identity verification market.
The acquisition suggests that private equity firms have ample funds and are seeking promising takeover candidates. It could pave the way for future strategic moves in the identity verification market, potentially leading to more startup exits in the near future.
However, the European Capital Markets Union has not progressed significantly due to member states' reluctance to surrender sovereignty and the risk of scaring off domestic companies. This reluctance may result in the European capital market remaining unattractive compared to the USA.
Despite this, the identity business is currently booming due to the increasing digitization of services, particularly in sensitive sectors like banking and insurance. The market environment is improving, with falling interest rates and inflation rates.
The identity verification market is characterized by numerous small providers in each country. In the long run, not all small providers may survive due to takeovers, mergers, and potential bankruptcies.
EU Commissioner for Finance, Maria Luís Albuquerque, has proposed measures to stimulate growth in the European capital market, such as easier securitization of bank loans and looser regulations for insurers' investments. However, more significant changes like harmonization of supervision or insolvency law have been postponed.
Lars-Thorben Niggehoff, a freelance journalist and founder of the journalism bureau dreimaldrei, who writes about financial topics, SMEs, and the real estate market for various publications including Brand Eins, Capital, Welt, and Wirtschaftswoche, has been following the developments closely.
Interestingly, Klarna, a European top company, has decided to go public on the other side of the Atlantic rather than in the EU. This decision could be a reflection of the current state of the European capital market and the attractiveness of the US market.
As IDNow continues to operate under Corsair's backing, it could potentially emerge as the winner from the anticipated consolidation in the fragmented identity verification market. The acquisition of IDNow by Corsair Capital is a significant moment in the industry, signifying a shift in the landscape of the digital identity verification market.
While the operational changes and strategic shifts since the acquisition are not yet clear, Corsair's focus on financial services, including identity verification platforms, aligns with their investment in IDNow. The acquisition is a testament to the potential of the digital identity verification market and the interest of private equity firms in promising ventures.
As we move forward, it will be interesting to see how IDNow and other players in the identity verification market navigate the changing landscape and capitalize on the opportunities presented by the booming identity business.
- Although the European Capital Markets Union has faced challenges in progressing significantly, the market environment for identity businesses, particularly in sensitive sectors like banking and insurance, is improving due to factors such as falling interest rates and inflation rates.
- Given the booming identity business and the potential for consolidation in the fragmented identity verification market, IDNow, now backed by Corsair Capital, could emerge as a significant player capitalizing on the opportunities presented by this market.
