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Investment in UK FinTech is off to a bumper start in 2019!

By Daniel Stack, Innovate Finance

2019 is on track to be another bumper year in UK FinTech investment. Q1/2019 has already overtaken the previous quarter of investment (angel, VC, CVC and PE growth), increasing 41% to over $1 billion of capital invested into FinTech startups in the UK.

Q1/2019 also shows the quickest start to a calendar year of investment in FinTech startups, overshadowing the prior four years by a significant margin.

The overall number of deals however has been steadily decreasing and is now almost half of what it was only two years ago, from 97 deals in Q4/2017 to 48 deals in Q1/2019. This reflects a trend of fewer deals but larger deal sizes.

By far the lion’s share of capital went to later stage VC and PE-led growth rounds in Q1/2019 – representing over 80% of total investment. OakNorth’s $440 million fundraise, led by SoftBank’s Vision Fund, was a record for UK FinTech and also catapulted the company to the position of Europe’s highest valued challenger bank.

 

Unsurprisingly angel, seed and early VC rounds represented over 70% of the deals in Q1/2019 (but less than 20% of capital invested).

 

Among the largest deals, challenger banks dominated the charts this quarter. Both OakNorth and Starling Bank kicked off the year with significant fundraises ($440 million and $98 million respectively). Payment startups GoCardless and Rapyd also ranked among the top deals with $76 million and $40 million raised. Online investment platform Nutmeg raised a new round of $59 million.

We recently spoke to many of the largest raisers in Q1/2019 (OakNorth, GoCardless and Starling Bank among others). Read more on why they fundraised and company strategies.

An interesting trend in Q1/2019 was FinTech startups raising large rounds as combinations of equity and debt investment, with iwoca raising $195 million ($26 million equity and $169 million debt) and MarketInvoice raising $73 million ($34 million equity / $39 million debt) this quarter.

For any further information on FinTech and investment trends, do check out Innovate Finance’s Capital programme. Don’t miss the Innovate Finance Global Summit on 29th and 30th April 2019 with over 40 VC firms and 300 FinTech startups attending and an Investment Zone and mobile app to help startups connect with investors and partners.

 

*Data provided by PitchBook as of 9 April 2019. Investment figures includes angel, seed, VC, corporate and PE led growth investment into UK FinTech startups (excluding any reported debt raised in round).