UK is fintech investment capital of Europe, attracting almost $5bn in 2019

British fintechs are leading the way as the Europe’s capital for fintech investment, attracting almost $5 billion (£3.8bn) in the past year.

Thursday, 30th January 2020, 4:45 pm
UK fintechs raised almost four times as much as the combined total from second place Germany. Picture: Contributed

Innovate Finance has found that the UK retained its role as the top-ranking investment destination in Europe in 2019, with venture capital and private equity investment growing 38 per cent year-on-year to a record of $4.9bn.

British-based fintechs represented seven of the top ten largest deals in Europe in 2019, and 11 of the 17 European “mega deals” came from the UK.

Innovate Finance, the industry body for UK-based fintechs, praised the results as “immensely encouraging” given the sustained levels of political uncertainty.

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Innovate Finance chief executive Charlotte Crosswell called the figures 'immensely encouraging'. Picture: Contributed

The report found a significant gap between Britain and its closest peers, with domestic fintechs raising almost four times as much as the combined total from second place Germany, which secured $1.3bn. Sweden ranked third with $778 million.

Globally, the UK was beaten only by the US, where fintechs raised a combined $16.3bn. The US also recorded the highest volume of total deals.

India took third place at $3.9bn while China dropped to fourth, experiencing a 93 per cent year-on-year decrease to $1.8bn.

Innovate Finance cited plummeting figures from the Chinese sector as the key driver for an overall drop in fintech investment worldwide. The global total slumped 28 per cent to $35.7bn.

Women-led fintechs get just 10 per cent

The data also revealed disproportionately low levels of backing for female founders and chief executives in the fintech sector, with only 10 per cent of capital invested in the UK going to female-led businesses.

This represents a slight improvement from 2018. However, Innovate Finance chief executive Charlotte Crosswell said there remains much work to be done in ensuring a more even distribution of the monies flowing into fintech businesses.

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Crosswell said: “It’s immensely encouraging to see the year-on-year growth in investment figures that the key areas of the global fintech industry are attracting, and we should be proud of the unique position the UK has carved out on an international level.

“We are a world-leading fintech hub and, as the figures reveal, the epicentre of fintech in Europe – all of which is a testament to the fact that the UK is a leading destination to start and scale a fintech business.

“The missing piece of the puzzle is ensuring we are also boosting female-led companies, and providing the capital to this area of the market.

“There’s no excuse for investors to be overlooking female founders, and as a collective we must do better to ensure long-term success and growth of the sector.”

Investment in Asia has dropped by 73 per cent year-on-year, largely due to the decline in China, while all other regions enjoyed an increase.

North America dominated the global field by attracting almost half (49 per cent) of all capital, while Europe ranked second with 24 per cent.

Innovate Finance pointed to the fact that the value of the top five deals in 2019 was only 11 per cent of the total figure, compared to 40 per cent of the total in the previous year, as a sign that the global fintech market is maturing.