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UK fintech Investment hits new highs as industry matures ahead of Europe

Global VC investment in fintech in 2018 reached a record $36.6bn, a jump of 148 per cent from 2017 and 329 per cent over five years.

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Cash pumped into UK fintech firms rose by 18 per cent to $3.3bn in 2018 as private equity investment soared by 57 per cent to $1.6bn, while venture capital dipped to $1.7bn as the UK fintech sector entered a new stage of growth ahead of its peers in Europe, according to a report from industry body Innovate Finance

The UK kept its position as a world leader, ranked third globally in VC investment behind China and the US Global VC investment in fintech in 2018 reached a record $36.6bn across 2,304 deals, a 148 per cent increase year on year. Within Europe, the UK continues to dominate followed by Germany ($716m and 48 deals) and Switzerland ($328m and 40 deals).

Revolut’s $250m fundraise ranked among the top ten largest global VC deals of 2018. Monzo, EToro, Liberis and BitFury were also among the UK’s top five deals, each raising over $80m.

Last year challenger banks took the lion’s share of VC investment at 27 per cent of the total, followed by personal finance and wealth management (19 per cent), alternative lending and Financing (18 per cent) and blockchain and bigital Currencies (10 per  cent).

Of course recent fund raises at N26 and Oaknorth have carried on this trend into 2019. London-based neo-bank Oaknorth is Europe’s most valuable fintech thanks to a Softbank led funding round last week totalling a massive $440m, pushing its valuation to $2.8bn. A few weeks back N26 raised $300m, suggesting a $2.7bn valuation.

The UK remains a competitive investment destination with 50 per cent of investment flowing in from overseas, largely from North America (25 per cent) and Europe (18 per cent).

Charlotte Crosswell, CEO of Innovate Finance, said that it is “encouraging” to see that investment continues to grow in the UK fintech sector, reaffirming its position as a leading global financial and technology centre.

“The UK has a unique position across financial services, technological innovation, regulators and government which all play a crucial role in this impressive growth journey. However, we should not be complacent as new challenges lie ahead; we must focus on growing our talent and capital pipeline across the UK, to ensure sustainable and inclusive growth in the future.”

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