UK FinTech deal activity hit record highs in 2020 as funding declined

Investors shrugged off Brexit and coronavirus uncertainty and backed 376 FinTech rounds in the UK last year

  • The UK FinTech industry entered 2020 on the back of a record-breaking 2019 which saw £6.7bn invested across 345 transactions. FinTech investment in the first quarter had a strong start with £1.3bn capital invested while deal activity increased by 28% compared to the first quarter of 2019 to reach 96 transactions.
  • However, the outlook quicky turned as investment declined sharply during the second quarter of last year as rising concerns about the economy caused by Covid-19 coupled with huge losses at several high profile FinTech scaleups such as Monzo and Revolut deterred investors. Only £1.1bn was invested in Q2 2020 across just 67 transactions, a 30% decline in deal activity compared to the opening quarter of the year.
  • Nevertheless, the pandemic opened new opportunities and investors shifted their attention away from late-stage deals as funding from deals over £50m declined 32.7% in 2020. At the same time transactions under £1m increased 3.4 percentage points (pp) while deals between £10m-£25m increased 1.2pp. This supported deal activity in 2020 as it set a new annual record despite funding declining 25.6% during the year.

The top 10 UK deals in 2020 raised over £2.2bn

  • The top ten UK FinTech deals in 2020 collectively raised £2.24bn, making up 44.6% of the overall investment in the sector during the year.
  • The largest round of the year was completed by Ki Insurance, the first fully digital and algorithmically driven Lloyd’s syndicate, which raised a $500m (£389m) funding round led by Blackstone Tactical Opportunities and Fairfax Financial Holdings. The company launched in Q4 2020 and is going to underwrite using an algorithm-driven approach and offer instant follow capacity through its proprietary digital platform.
  • Out of the top ten deals in the UK, two deals were completed by Snyk,a company that builds security into the application development process, which raised a $200m Series D round led by Addition in Q3 on the back of a $150m Series C round completed in January. These rounds saw the company attain a unicorn status. The latest investment round comes after a year that has seen Snyk grow its revenue by 275% and increased its headcount by 100%. The company currently has 375 employees with plans to add 100 more in the next year.

The data for this research was taken from the FinTech Global database. More in-depth data and analytics on investments and companies across all FinTech sectors and regions around the world are available to subscribers of FinTech Global. ©2020 FinTech Global

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