Despite a 9% hit, UK remains top of the fintech investment leaderboard in Europe

UK fintech is the hottest sector to invest in fintech in Europe, according to data from Innovate Finance.

Today the fintech industry body released figures for global fintech investing, which show the UK fintech sector remains on top in Europe and second only to the US globally.

Fintech in the UK accounted for just under half of the total $9.3bn invested in Europe, receiving a total of $4.1bn in venture capital across 408 deals, an average of over $10m per deal.

Despite the huge amount invested in the UK, the total amount is nine per cent lower than the previous year, no doubt because of the Covid-19 pandemic and the related economic turbulence.

Charlotte Crosswell, CEO of Innovate Finance, said: “Given the tough and turbulent year we’ve experienced, it’s very encouraging to see strength and resilience in the global fintech sector’s ability to raise capital. Now more than ever, we should celebrate the strong position the UK has carved out at an international level.”

“The pandemic has created new barriers for many companies seeking funding, so it is all the more vital that we support our innovative companies to fuel their future success and growth.”

According to the data, London-based firms dominated the vast majority of deals, attracting 91 per cent of the total cash invested in UK fintechs, receiving a total of $3.8bn across 310 deals.

Behind the UK, Germany received the most funding, accounting for $1.4bn across 71 deals, an average of over $19m per deal and an increase of 50 per cent from the year before.

Sweden came in third place with $1.3bn of capital raised and France and Switzerland closed out the top five, raising $522m and $294m respectively. 

Despite the impressive figures from countries across Europe, the gap between the UK, in first place, and Germany in second shows just how strong the UK fintech scene is and that its place at the top of the leaderboard for the past decade doesn’t seem to be shifting just yet.

Globally, the US topped the leaderboard, raising $22bn, an increase of 29 per cent from 2019, while Indonesia came in third with $3.3bn invested in total and India followed closely behind with $2.6bn invested in fintechs in total. 

In a positive step towards better gender diversity in the fintech industry, investment backing for female founders in the UK grew to $720m in 2020, accounting for 17 per cent of the total invested and a jump up from the 11 per cent share female founders had in 2019.

The figures published by Innovate Finance differ slightly from a report published by Dealroom last week.

Dealroom’s numbers account for all venture capital raised across Europe, not just fintech, and show a 22 per cent drop in total funding in the UK, compared to just a nine per cent drop according to Innovate Finance’s fintech-focused report. 

So, despite the slight dip fintechs appear to be receiving a larger chunk of venture capital funding across the board, showing the resilience of the sector.