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Saturday 21 July 2018

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UK FinTech investment up against global decline

Written by Anthony Strzalek
26/07/2017

Global venture capital (VC) investment in FinTech was valued at $6.5 billion in H1 2017, a 45 per cent decrease on last year, while UK investment rose 37 per cent on 2016’s half year figures, the latest Innovate Finance data shows.

The research found that while global FinTech investment fell, UK VC investment for FinTech firms increased by 37 per cent to $564 million, despite Brexit and the future uncertainty between European markets and the UK’s financial services sector. However this is still lower than the pre-Brexit H1 2015 figure.

The UK ranked third globally in total investment behind the US and China, and second in terms of deal volumes with 102 deals. The top five UK deals were Atom Bank, Funding Circle, Zopa, Monzo and Currency Cloud.

This year’s global FinTech investment decline has been partly attributed to a number of ‘mega-deals’ in China in H1 2016 where three companies raised over $1 billion each. If you were to exclude these three deals, global VC FinTech investment in H1 2017 actually rose by more than 28 per cent.

The US attracted the most investment both in deal value, which topped $3.3 billion, and deal volume, with 357 investments in total. Overall, the US experienced a 7.7 per cent increase on H1 2016 deal value, but an 18.5 per cent decrease in deal volume. Last year at this point, the US had secured 438 deals.

China, which raised the largest amount of VC investment in H1 2016 at $7 billion, following the three mega-deals, dropped to second place in H! 2017 with $1 billion of investment, a 86 per cent year-on-year decrease.

Abdul Haseeb Basit, CFO of Innovate Finance, said: “The investment data for the first half of 2017 shows that global FinTech investment is down versus the same period in 2016, however, if you adjust for the exceptional mega-deals in China in H1 2016, where three companies, Alipay, Lufax.com and JD Finance, raised over $1billion each, we see that global investment has gone up 28.4 per cent.

“Despite the uncertainties of Brexit, the UK retains its position as a leading FinTech hub and has attracted more investment in H1 2017 than the same period last year,” he continued. “These investment figures are lower than H1 2015, signalling a slow return to pre-Brexit funding levels. The UK government needs to continue its support for the sector, by ensuring the country remains attractive to talent and investment, while also maintaining an open trading relationship with Europe and the rest of the world.”



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