Record High Achieved by UK Fintech VC Investment Last Year as China Lags Behind

Photo by Diliff via Wikimedia Commons

New figures revealed that investment by venture capitalists into fintech in the United Kingdom achieved a record high last year resisting a global downturn and improved at a faster rate compared to its rivals, shaking off fears of a slow down due to Brexit.

2017 had $1.8bn (£1.3bn) of cash flow into startups that are working on innovative financial technology, an increase of over 150 percent as compared to that of 2016 and a bigger improvement compared to China or the United States of America.

Some investors turned their attention back to the United States, where $7bn was invested into fintech startups in 2017, which is a rise of 21 percent. The top spot has been taken by China in 2016. However, investment dropped by 80 percent last year placing the country into the third spot and leaving the United Kingdom in second place behind only the United States.

The report that was compiled by Innovate Finance and Pitchbook revealed that the pullback from China contributed to an overall decline of 18 percent in fintech investment worldwide to $14.24bm. However, two “mega” rounds that are worth $1bn each in China contributed to an “exceptional” year in 2016.

It is considered as a reversal of fortunes on the past year when investment increased in China but dropped in the United States and by a third in the United Kingdom in the wake of the Brexit vote.

The research discovered that investors are investing larger amounts of cash into fewer deals in the United Kingdom. The number of deals dropped from the past year to 224.

Two of the top 20 global deals were for the firms in the United Kingdom namely: Oaknort and Transferwise. Deals for Interactive Investor, Monzo, and Funding Circle were included in the top five biggest deals in the United Kingdom.

Over half of the cash that was invested came from outside the United Kingdom and 25 percent of that from North America.

Charlotte Crosswell, the Innovate Finance chief executive, stated: “There is no doubt that London’s position as a leading financial and technology centre is driven by the UK’s focus on policy and talent, allowing us to attract the entrepreneurs and investors that are bringing real, positive change to the world of fintech.”