Innovate Finance launch the 2018 VC FinTech Investment Landscape Report

Author

UK Business Angels Association

13 February 2019

VC and private equity investment in the UK FinTech sector rose to a record $3.3 billion in 2018, up 18% year-on-year, a report from industry body Innovate Finance showed on Tuesday.

Growth private equity investment rose 57% to $1.6 billion, while venture capital dipped slightly to $1.7 billion as the UK FinTech sector enters a new stage of its growth journey, ahead of its peers in Europe.

The United Kingdom’s FinTech sector kept its position as a world leader, ranking third globally in terms of venture capital invested behind China and the US. Within Europe, the UK continues to dominate followed by Germany ($716 million and 48 deals) and Switzerland ($328 million 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 $80 million.

Challenger Banks took the lion’s share of VC investment at 27% of the total, followed by Personal Finance and Wealth Management (19%), Alternative Lending and Financing (18%) and Blockchain and Digital Currencies (10%).

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

Just 6% of deals had a female founder, representing only 3% of the total capital invested in 2018. These findings emphasise the strong need for greater diversity and fairer access to investment. More needs to be done to ensure the sector has access to the widest pool of talent and capital to grow sustainably and inclusively in the future, and across the entire UK economy.

London continues to be the preeminent centre for FinTech in the UK, with over 80% of FinTech startups receiving venture capital headquartered in London, claiming over 90% of capital invested. The sector will need to consider how to increase its reach across the UK to tap into the competitive advantage of the wider UK economy.

Global VC investment in FinTech in 2018 reached a record $36.6 billion, a jump of 148% from 2017 and 329% over five years. China’s Ant Financial dominated 2018 with $14 billion raised – representing 38% of all venture capital in FinTech. JD Digits ($1.9bn – China), Dataminr ($392m – US), Oscar ($375m – US) and Robinhood ($363m – US) were also among the top deals of 2018.

Commenting on the findings, Charlotte Crosswell, CEO of Innovate Finance, said:

“It is very 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.”

The 2018 FinTech VC Investment Landscape Report is based on data compiled and validated by Innovate Finance using PitchBook.

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