Despite Brexit uncertainty, the UK FinTech industry is still attractive to investors

UK FinTech investment in the first half of the year beats funding levels from H1 2017

  • Annual FinTech investment in the UK almost quadrupled between 2014 and 2017, with the number of deals increasing from 172 to 234 over the same period.
  • FinTech investment in the UK during the first half of 2018 reached nearly $1.3bn across 74 deals, pushing the average deal size for the year above $17.2m. Atom Bank, one of the most well-funded challenger banks in the UK, raised $207.1m of venture funding in the largest UK FinTech deal of Q1 2018. The funding was led by BBVA with the aim to roll out new products and services in the future.
  • FinTech investment in 2016 dipped from the previous year, driven by Britain’s decision to leave the EU which resulted in a significant slowdown during H2 2016. We could see a repeat of that trend amid the current uncertainty of exiting without a deal which can put pressure on investment as we get closer to the deadline next March.
  • However, FinTech investment in H1 2018 was 7.5% higher than in H1 2017, setting modest funding expectations for the rest of the year.

Funding in Q2 2018 surpasses Q2 2017, with almost $750m raised

  • Q3 2017 set a quarterly record for UK FinTech funding with over $1.5bn raised across 67 deals, equal to almost 40% of the total capital raised last year.
  • Investment in Q2 2018 reached $734.3m, up almost $200m from the previous quarter and 12% higher than in Q2 2017. Notably, Invacio, an AI-driven big data analytics provider, raised $22m in April 2018 in the only UK FinTech ICO of the quarter.
  • FinTech investment in the UK during the first half of 2018 was just under $1.3bn, equal to 31.9% of the total funding raised in 2017. However, more than 70% of the total investment in 2017 was raised in the second half of the year making it hard to predict where UK FinTech funding will be come December.

More than $900m was raised in the top 10 UK FinTech deals in H1 2018

  • Over $921m was raised in the top 10 FinTech deals in the UK in H1 2018, equal to 72.3% of the total capital raised by UK FinTech companies during that period.
  • Revolut, a London-based challenger bank, raised a $250m Series C round in Q2, which was the largest FinTech investment in the UK this year. Revolut now has over 1.5m users and this funding, led by DST Global, lifted the company’s valuation to $1.7bn, joining TransferWise and Funding circle in the UK FinTech unicorn club.
  • Liberis, a merchant card advance finance provider for SMEs, raised $77.7m in the largest UK FinTech debt financing deal of 2018. This funding in April 2018 came from financiers such as Paragon Bank and to date, Liberis has helped over 7,000 small businesses, advancing £210 million in funding.

The 10 most active FinTech investors in the UK have been involved in nearly 100 deals since Brexit

  • The 10 most active FinTech investors have been involved in 95 deals since the UK referendum decision to leave the EU in June 2016.
  • Investors include venture capital firms, funding platforms and accelerators, highlighting the diversity of funding sources available in the UK FinTech ecosystem.
  • Balderton Capital has been the most active investor, participating in 14 deals between Q3 2016 and Q2 2018. Balderton most recently led the $13m Series A round that Tessian, an email communications monitoring solution provider, raised in June 2018.
  • Trussle, an online mortgage broker, raised $18.4m in Series B funding in May 2018, with plans to invest in branding and product development. Seedcamp invested alongside propel Venture Partners and Goldman Sachs in the round.

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. ©2018 FinTech Global

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