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UK venture capital is growing again, fintech leads the charge

UK startups raised more venture capital from US investors in Q3 than they did from domestic sources

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A widening fintech funding gap has been a growing concern for investors and others in the UK's fintech industry this year despite initiatives such as the recently launched Fintech Growth Fund.

However, a recovery may well be on the cards.

Fintech is still the top category for venture capital investment in the UK in 2023, according to data from Dealroom and HSBC Innovation Banking.

In the third quarter of 2023 UK venture capital has shown signs of moving into growth again after two years of declining volumes over the past two years.

In Q3 2023, the most recently available data, $4.9B of venture capital was invested in the UK in total, up 14 per cent from the previous quarter.

The UK’s tech ecosystem, the third largest in the world after the US and China, is by far the leading destination for VC investment in Europe with a total of $15bn raised in 2023. Dealroom forecasts this will reach 18bn by the end of the year.

Fintech, which comprises starting funding in insurance, mortgages & lending, banking and payments categories totals $2.1bn so far.

Biotechnology ($1.6bn), mobility ($1.4bn) and energy storage ($1.4bn) were the next largest categories.

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