UK FinTech deal activity declined by 20% compared to Q1 2017

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fintech insurtech wealthtech regtech ai cybertech esg news

The UK FinTech industry received £425m-worth of funding in Q1 2018, a value in line with the same quarter of last year

  • Investment in UK FinTech companies was at an elevated level in the second half of 2017. Over £1bn was invested in both Q3 and Q4, making these the strongest two funding quarters to date.
  • In the first quarter of 2018, total investment took a breather and returned to historically normal levels. A total of £424.4m was invested, almost the same amount that was invested in Q1 2017. Funding from deals valued less than £75m increased by 5.5% YoY.
  • The largest UK FinTech deal in the opening quarter of the year was a £149m investment in Atom Bank, a Durham-based challenger bank. The venture round was led by BBVA with co-investment from Toscafund Asset Management.
  • Deal activity was towards the lower end of the historical range with a total of 47 deals closed. This represented a decrease of 11.3% compared to Q4 2017.

UK FinTech funding made a slow start in 2018 after a record 2017

  • UK FinTech investment rocketed last year to reach a record £3.4bn-worth of funding across 236 deals. This was more than triple the total capital invested in 2016.
  • The £424.4m invested in the first quarter of 2018 equates to just 12.5% of last year’s total funding. However, investment was similarly slower at the beginning of 2017 and picked up later in the year.
  • Deal activity was also slightly behind pace in Q1 2018; the 47 deals closed represented 19.9% of 2017’s yearly total.

The Marketplace Lending sector has received the largest share of capital since 2015

  • Between 2015 and Q1 2018, the Marketplace Lending sector received a third of all capital invested in UK FinTech. The largest deal in this category was a £300m investment in Lendable, a P2P lending platform. The debt financing round was led by Castle Trust Capital in Q4 2017.
  • WealthTech had the second largest share of investment over the same period with 19.7% of the total, followed by Payments & Remittances with a 16.2% share.
  • Despite having the largest share of total investment, the Marketplace Lending sector received just 12.7% of all UK FinTech deals. Both WealthTech and Payments & Remittances received a higher share of deals than this with 16.2% and 19.2%, respectively.
  • As a result, the Marketplace Lending sector had the highest average deal size at £21.9m. This is considerably larger than both WealthTech at £10.9m and Payments & Remittances at £8.1m.
  • The “Other” category consists of the Blockchain & Cryptocurrencies, Institutional Investments & Trading, Funding Platforms and Data & Analytics sectors.

The top two most active FinTech investors in the UK are crowdfunding platforms

  • The top ten FinTech investors in the UK between 2015 and Q1 2018 made a combined total of 170 investments. This equates to 22.9% of all UK FinTech investments over the same period.
  • All investors in the top ten have headquarters in London with the exception of Crowdcube which is based in Exeter.
  • Equity crowdfunding platforms were among the most popular means of sourcing capital for UK FinTech companies, with Seedrs and Crowdcube claiming the top two spots for most active investor. The remainder of the top ten consists of two accelerators, Startupbootcamp and Barclays Accelerator, and six venture capital firms.

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