UK FinTech investment rebounds to record
Monday 26th April 2021
Quite remarkably, one year ago, we reflected how venture investment into the FinTech sector fell off a cliff, overshadowed by the (then) unknown longer term impact of coronavirus.
This year we find ourselves in dramatically different circumstances.
We saw a record quarter for investment into the sector with UK FinTech companies raising $2.9 billion across 117 deals. It is amazing how much of a stark difference it is one year on!
Investment in FinTech is off to a blazing start this year. Investment is 153% higher (2.5x) than the final quarter of 2020. Perhaps more impressively, this represents 69% of the total investment in 2020. The first three months of this year have also seen six mega-deals so far (ie. exceeding $100m in value), nearly matching a total of seven in 2020.
The top raisers included payments company Checkout.com ($450m), digital challenger bank Starling ($376m), crypto platform Blockchain.com ($120m initially and then $300m) as well as payments companies Rapyd ($300m), PPRO ($180m initially and then $90m) and Curve ($95m).
For investors, Covid 19 put a blowtorch to the business models of many FinTech start-ups with the effect of clarifying investment opportunities for 2021.
The accelerating interest from international investors reflects the UK FinTech ecosystem’s twin attractions of start-ups that rapidly scale internationally and the local presence of experienced VC investors investing at the early stage.”
Kevin Chong, Outward VC
Interestingly, nine of the top ten deals this quarter were led by international investors (predominantly from the United States).
Several UK FinTech companies also appear to be in process for public market exits this year, with Wise and PensionBee set to go public on the London Stock Exchange. Fingers crossed this may be only the start of many more to come.
Q1 investment has seen a continuation of the momentum through the end of last year which highlights the resilience of the sector, appetite for innovation, and significant upside potential for UK FinTechs. Increased international interest highlights the UK’s comparative advantage in FinTech and the increasing ability to scale – overall positives dynamics benefiting the ecosystem at large.
The investment chapter of the Kalifa review did well to unify some common but anecdotal narratives around the UK FinTech landscape with helpful recommendations to support grass roots FinTech investing as well as those businesses that are making the jump from start-up to scale up. We eagerly await to see what materialises from a practical standpoint.”
Jay Wilson, AlbionVC
The positive news reflects a growing and maturing FinTech sector. Innovate Finance’s recent work in the Kalifa Review of UK FinTech offers a perspective of how Government can also play a leading role in helping to further support the sector’s growth.
To learn more about the investment landscape, leading FinTech companies and other key trends please feel welcome to browse through Innovate Finance’s extensive library of content featuring fire-side discussions, panels and breakouts from UK FinTech Week.