UK fintech investment falls to $9.6bn

There were 262 fintech deals, including M&A, private equity and venture capital, in the first half of 2022 down, compared with 341 in the same period of 2021.

In the first six months of 2022 venture capital investment in UK fintech companies fell to $9.6bn, a reduction of nearly two-thirds compared with the same period in 2021, according to data from KPMG.

In total there were 262 fintech deals, including M&A, private equity and venture capital in the first half of 2022 down, compared with  341 in the same period of 2021. 

The figures, which come from KPMG’s Pulse of Fintech report, show how a worsening economic outlook - related to geopolitical uncertainty, turbulent public markets, ongoing supply chain disruption, high levels of inflation and increasing interest rates - is affecting funding for startups. 

“Despite a slowdown in UK fintech investment compared to last year, the UK remains at the centre of European fintech innovation with British fintechs attracting more funding than those in France, Germany, China, Brazil and Canada combined,” said John Hallsworth, Client Lead Partner for Banking and Fintech at KPMG UK.

Last year saw record highs experienced in fintech venture capital and other deal-making, including the likes of a $14.8bn deal for Refinitiv in January 2021. 

Taking out 2021’s outlier results, such as the Refinitiv deal, UK fintech investment's falls are less dramatic. In fact funding is therefore above the figure for the first half of 2019 of $3.8bn. Five out of the ten largest fintech deals in the first half of 2022 in the EMEA region were completed in the UK also.

Total global fintech funding across M&A, PE and VC reached US$107.8bn across 2,980 deals in this period. Payments continued to attract the most funding among fintech subsectors, accounting for just under half - or $43.6bn of investment compared to the $60.3bn seen during all of 2021. 

The acquisition of Australia-based Afterpay by Block (formerly Square) for $27.9 bn accounted for the largest payments deal of the quarter —and the largest fintech deal globally so far this year.