Early report suggests UK fintech funding declined again in 2023
Down 63 per cent, according to a report from Tracxn, to just $4.2bn raised last year
Investment into UK fintechs suffered again last year, with one early report suggesting the market saw a 63 per cent decline in funding into the sector.
According to Indian data intelligence firm Tracxn, UK fintechs raised just $4.3bn in 2023, a sharp drop from $11.2bn in 2022, which itself was down 13 per cent from $12.9bn in 2021.
Fintechs based in London took the lion’s share of the funds raised, with $3.5bn going to those based in the capital, a figure that placed London as the second-largest city for fintech funding after San Francisco in 2023.
Leading the overall UK decline in capital raised was a sharp fall in the number of late-stage $100m+ rounds, with just nine raised in 2023 — including SumUp’s 11th hour $307m Series D in December— versus 25 in 2022.
Cumulatively these late-stage rounds added just $2.7bn to the total raised by UK fintechs in 2023, down 60 per cent on the $6.8bn worth of late-stage funding.
While the UK fintech sector is competitively positioned globally, Tracxn attributes the disappointing 2023 results to the prevailing macroeconomic conditions, including high interest rates, inflation and surging natural gas prices.
As well as new investment, the market for M&A was also depressed, with Tracxn recording 66 acquisitions last year, down from 70 in 2022 and 95 in 2021.
Tracxn said Seedcamp, Techstars and Anthemis Group were the most active investors in the UK Fintech sector overall during the year, while SoftBank Vision Fund was the leading late-stage investor.