Innovate Finance reveals record VC investment in UK FinTech in 2017
54% of investment into UK FinTech was from non-domiciled VCs
- VC investment into UK FinTech saw a 153% increase yoy, with $1.8 billion invested in over 224 deals
- The UK ranked second globally in terms of both capital invested and volume of deals, after the US
- Two UK companies rank in the top 20 global deals, attracting rounds of over $200 million: TransferWise ($280 million) and OakNorth ($203 million)
- Global VC investment into FinTech reached $14.4 billion across 1,824 deals globally, down 18% yoy
February 7th 2018, London – Innovate Finance, the UK membership association that represents global FinTech, today announced the findings of its 2017 FinTech VC Landscape report.
Commenting on the findings, Charlotte Crosswell, CEO of Innovate Finance, said: “Our 2017 FinTech VC Landscape report demonstrates that the UK’s FinTech sector is cementing its position as a world leader. Investment in UK FinTech firms increased 153%, and of these inflows into the UK, 54% came from non-domiciled VCs. There is no doubt that London’s position as a leading financial and technology centre is driven by the UK’s focus on policy and talent, allowing us to attract the entrepreneurs and investors that are bringing real, positive change to the world of FinTech.”
VC investment in UK FinTech firms was up 153% at $1.8 billion, more than doubling the investment in 2016 of $704 million and surpassing the previous record-breaking total in 2015 of $1.1 billion. The UK attracted 224 deals in 2017, the highest volume outside the US (765). The top two UK deals, TransferWise and OakNorth, both raised rounds of over $200 million and were ranked amongst the top 20 global deals.
Industry VCs see this as the inevitable result of the UK’s leading FinTech position and fundamental strength as a FinTech ecosystem. Augmentum Capital believes the UK remains at the epicentre of FinTech, continuing to attract new companies and fresh capital both from corporates and venture funds. Other contributing factors include a maturing industry, stronger talent base, the progressive regulatory environment and a high availability of capital.
The maturing of the FinTech industry gave rise to larger rounds in 2017, with the top five FinTech deals in the UK all raising over $90 million (TransferWise, OakNorth, Funding Circle, Interactive Investor and Monzo). Of the total 2017 UK VC investment, 24% went into Challenger Banks, followed by Money Transfer and FX (21%), Alternative Lending/Financing (17%) and Personal Finance/Wealth Management (11%).
54% of investment into the UK was from non-domiciled VCs, largely based in North America (25%) and Europe (14%). This is consistent with previous years and shows that the UK remains attractive to outside investment, despite Brexit uncertainty.
Global VC investment into FinTech reached $14.4 billion across 1,824 deals globally, an 18% decrease yoy. However if the two China “mega-rounds” of Alipay and JD Finance – each over $1 billion – are excluded as “exceptional” from 2016 figures, global investment increased 19.4%.
The US was the global leader in terms of capital invested and deal volume, contributing three of the top five global deals (SoFi, Avidxchange and Kabbage). China, which was top in terms of capital invested in 2016, saw an 81% decrease in 2017 and dropped to third place with $1.6 billion invested in over 39 deals.
The top five global investors by number of investments were: 500 Startups (49 deals), YCombinator (38 deals), Startupbootcamp (31 deals), Techstars (21 deals) and Ribbit Capital (18 deals).
The 2017 FinTech VC Landscape Report is based on data compiled and validated by Innovate Finance using PitchBook.
About Innovate Finance
Innovate Finance is an independent membership association that represents the UK’s global FinTech community. Founded in 2014 and supported by the City of London and Broadgate, Innovate Finance is a not-for-profit that advances the country’s leading position in the financial services sector by supporting the next generation of technology-led financial services innovators. More than 250 global members have joined the Innovate Finance ecosystem to date. These companies range from seed stage startups to global financial institutions and professional services firms. All benefit from Innovate Finance’s leading position as a single point of access to promote enabling policy and regulation, talent development, and business opportunity and investment capital. By bringing together the most forward-thinking participants in financial services, Innovate Finance is helping create a global financial services sector that is more sustainable, more inclusive and better for everyone.
Teresa Chick, Innovate Finance
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