UK FinTech funding rebounded strongly with a record Q1 off the back of a subdued 2020

UK FinTech companies raised over £3.7bn across 137 deals in the first three months of 2021

  • As London established itself as the FinTech capital of the world, the UK FinTech sector experienced exponential growth in investment between 2017 and 2019. Total funding grew at a CAGR of 42.5% from £3.3bn to over £6.7bn over the period.
  • The growth of the sector has been driven by a combination of factors such as the country’s strong track record for R&D in technology, large pool of talent, access to leading financial institutions, supportive regulatory policies set by the FCA and ample access to funding.
  • However, funding to the sector declined last year to £5bn as coronavirus and economic uncertainty forced investors to scale back on large investments. Despite this, they remained undeterred in the positive prospects of the industry, as financial services were moved digitally, and UK deal activity set a record of 375 transactions in 2020.
  • As the outlook for the economy improves amid high vaccination rates, FinTech investment in the UK had a record start to 2021 with £3.7bn capital invested in the opening quarter, a sum far exceeding the £1.3bn raised in Q1 2020. Additionally, deal activity increased by 42% compared to the same period in 2020 to reach 137 transactions.

The top 10 FinTech deals in Q1 raised over £2.7bn in total

  • The top ten FinTech deals in the UK completed during the first three months of 2020 raised in aggregate £2.75bn, making up 72.9% of the overall investment in the country during Q1 2020.
  • SumUp raised the largest deal of the period after closing a €750m funding round led by Goldman Sachs, Temasek, Bain Capital Credit and Crestline in March. The capital has been earmarked for the growth efforts of the company, which includes acquiring and supporting existing merchants. Funds will also be used to continue its M&A efforts and refinance its existing debt facilities.
  • Notably, closed a $450m Series C funding round at a $15bn valuation, making it Europe’s most valuable venture-backed FinTech for a short time until Klarna surpassed it by raised a huge $1bn round. The round was led by Tiger Global Management and the company plans to use the new cash injection to scale its operations around the world, focusing predominantly on the US.

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.

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