Brexit fears failed to trouble UK FinTech investments in H1 2017

Figures from the first half of the year suggest that 2017 is set to be a record year for FinTech Investments in the United Kingdom if election outcome doesn’t have a severe impact

The United Kingdom has a resilient FinTech Sector which has grown steadily at a CAGR of 18.1% between 2014 and 2016, despite significant political uncertainty around Brexit. This growth has continued in the first half of 2017 with UK based FinTech companies receiving £769m worth of funding – more than two thirds of the total amount invested in 2016. Last year total funding fell by 6.7% YoY, however this was mainly due to a 45.6% fall in the amount invested in deals valued above £75m. In contrast, early-stage deals valued under £75m saw an increase of 17.9% between 2015 and 2016. This fall in large deals could possibly be attributed to a fall in confidence after the Brexit referendum or other cyclical effects as larger deals are lumpier over time.

Despite a fall in the total funding in Q2 2017 the number of deals rose to a six-quarter high.

  • Total FinTech investments have picked up after falling to £203m in Q3 2016 after the Brexit referendum. The first half of this year saw 16.9% more investment than the first half of 2016. Moreover, the total amount invested in Q2 2017 was more than £50m higher when compared with the same quarter last year.
  • The number of FinTech deals in the country continued its recovery from its lowest point of 50 transactions in Q4 2016 reaching a six-quarter high of 57 in the most recent quarter.
  • One of the largest investments to FinTech companies based in the United Kingdom in Q2 2017 was to P2P lending firm Zopa which received £32m in a series E deal in June.

FinTech companies based outside of London are attracting increased interest from Investors

 

  • Between 2014 and 2015 the share of total investment to FinTech companies based outside of London fell by 3%. In 2014 the 16% share of investment was partly due to a £40m deal to Peterborough based Aldermore Bank. This deal alone made up 6.3% of the total amount invested in UK FinTech companies in 2014.
  • Since 2015 the share of Investment in FinTech companies based outside of London has progressively increased to 29% in the first half of this year. FinTech copanies based outside of London received £97.1m more investment in 2016 than in 2014.
  • So far in the first half of 2017 Durham-based Atom Bank raised £83m in Q1 and Altrincham-based Paybreak, which develops retail finance solutions, raised £24.5m in Q2.

The top three sectors; Payments & Remittances, WealthTech and Marketplace Lending received 47% of deals to FinTech companies in the UK

  • The Payments & Remittances sector received the highest number of deals between 2014 and Q2 2017. The largest deal in Q2 2017 went to mobile payments and rewards company Yoyo Wallet, which received £12m in June.
  • Infrastructure & Enterprise Software, Real Estate and RegTech companies have received just over one quarter of deals since 2014. In this period, these sectors received £343.6m, £312.5m and £95.4m of investment respectively.
  • 13% of deals went to other FinTech Sectors, these include companies specialising in InsurTech, Cryptocurrencies and Blockchain.

The top ten investors took part in 25% of deals to FinTech companies based in the UK since 2014

  • The top ten investors in FinTech companies based in the UK between 2014 and Q2 2017 took part in 25.3% of deals with the most active investor, Seedrs taking part in 6.3% of deals.
  • Eight out of the top ten most active investors are based in the United Kingdom. The remaining two; Global Founders Capital and Index Ventures are headquartered in Berlin and Geneva, respectively. Thus all op ten most active investors in British FinTech companies are based in Europe.
  • The top two most active UK investors are both equity crowdfunding platforms which allow individuals to invest in start-ups. Of the remaining eight investors, there are two accelerators; Startupbootcamp and the Barclays Accelerator and six VC firms.

The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies in United Kingdom as well as across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2017 FinTech Global

 

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