It is fantastic to see that UK FinTechs are continuing to secure outstanding levels of investment - this is a testament to the strength of our ecosystem, including our innovative entrepreneurs and founders, strong and diverse talent pool, and a supportive government and regulatory framework.
“It is critical that we now keep up this momentum. The UK is currently receiving more investment in FinTech than all of Europe, second only in the world to the US. We must continue to work together - industry, government and regulators - to build on this leadership and ensure the UK remains the best place in the world to start, build and scale a FinTech business. This will positively impact not only the financial services sector but the entire population of the UK as a whole who will benefit from new, innovative, and more effective products that drive greater financial wellness.”
- Janine Hirt, CEO, Innovate Finance
The Global Landscape
Internally we get insights as to what's happening in public markets. We look into publicly available data for equities and fixed income…and assess early signals of the market overheating, which we started to see December 2021. We saw signals of a correction of the public markets not only on tech side but public equities due to overvaluation.”
- Erik Mostenicky, Vice President, Fidelity International Strategic Ventures
One thing is clear [amongst all investors]: there is plenty of dry powder to invest. Though this recovery will be slow. Inflation takes time to fix [so we can expect] it to take a good two years for things to go back to ‘normal’… VCs are being more choosy and more concentrated. There is [simply] less appetite for growth at all costs” as in the past few years.”
- Kevin Chong, Co-Head, Outward VC
Good companies are started in good and bad economic cycles - the difference is just you pay for them. This [fintech venture] is the ultimate market of opportunity, there are still great companies that need funding out there and now is the time to potentially unlock a deal.”
- Jay Wilson, Investment Director, AlbionVC
Global Investment in Numbers
$1.4 bn
United Kingdom
$1.2 bn
Germany
$1 bn
United Kingdom
$748 m
United States
$690 m
Singapore
The Top 10 Countries to host
the highest levels
of capital invested include:
| 1. United States | $25.1 bn |
| 2. United Kingdom | $9.1 bn |
| 3. India | $3.9 bn |
| 4. Germany | $2.4 bn |
| 5. France | $2.3 bn |
| 6. Singapore | $2.1 bn |
| 7. Indonesia | $1.3 bn |
| 8. Brazil | $1.2 bn |
| 9. Canada | $0.8 bn |
| 10. Australia | $0.6 bn |
The UK And Europe
The UK also firmly holds its spot as the top European FinTech Hub.
The Top 5 destinations include:
| 1. United Kingdom | $9.5 bn |
| 2. Germany | $2.4 bn |
| 3. France | $2.3 bn |
| 4. Sweden | $0.6 bn |
| 5. Italy | $0.6 bn |
Macroeconomic Considerations
And Investor Advice
This is different to any downturn. There is a strong case to be made that good businesses will continue to be funded”, provided that startups launch truly innovative products and operate with sustainable financial runways. According to Richards, the slowdown in investment activity, combined with the reports of lower valuations, adds up to “a sense check from the massive valuations” of recent years. “It’s a cue [for the FinTech ecosystem] to get back to basics and focus on what's important: world class entrepreneurs and innovative business models”
- Oliver Richards, Partner, MMC Ventures
This correction will be good for early stage startups [in the long run] for several reasons. One, as values go down companies become more attractive to investors. Two, companies will have a better chance of success. For founders, lower valuations can allow them to live up to investors' expectations”
- Kevin Chong, Co-Head, Outward VC
Right now investors are attracted to founders who will be “responsible stewards of capital”, who are focused on sensible and sustainable growth and strong unit economics.”
- Jay Wilson, Investment Director, AlbionVC
