UK FinTech investment up 45% in record year

The UK FinTech sector is on course for a record year, with investment in the first half of 2019 reaching $2.9bn across 123 deals, up 45 per cent on 2018.

Driven by a strong start in the first two months of the year, total capital invested in FinTech startups from January to June reached nearly 85 per cent of the total raised in the whole of 2018, according to new figures from Innovate Finance.

Capital investment in the UK’s FinTech start-ups was up 45 per cent on the same period last year, with nearly double the inflows of the second half of 2018.

While the overall number of deals has been steadily decreasing since the start of 2018 - dropping by around 30 per cent year-on-year - the size of investment has increased, suggesting the growing maturity of the UK’s FinTech sector, with challenger banks such as Monzo and Starling raising $147m and $98m respectively.

The vast majority (85 per cent) of funding went to later stage venture capital and private equity growth rounds, with SoftBank’s Vision Fund ploughing $880m into Greensill Capital in the largest FinTech funding round ever, followed by OakNorth’s $440m injection.

Earlier stage investment was less buoyant, however, with angel, seed and early stage venture capital rounds on a downward trajectory, accounting for less than 15 per cent of capital invested.

Smaller startups that scored significant investment included SME business lender iwoca’s $195m raise in February, and e-commerce retail credit firm DivideBuy, which raised $78m.

UK payments firms also saw strong growth in investment in the first half of the year, with Checkout.com raising $230m, WorldRemit $175m and GoCardless $76m.

London-based FinTech companies accounted for 90 per cent of total investment and 78 per cent of the total number of deals. However, FinTechs in the rest of the country were catching up, notably in Greater Manchester, Derbyshire and Newcastle.

Some of the larger equity deals outside of London included Evolution Funding in Chesterfield ($143m), DivideBuy in Newcastle ($15m), AccessPay in Manchester ($12m), ANNA Money in Cardiff ($11m) and Mojo Mortgages in Macclesfield ($9m).

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