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Friday 13 December 2019

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FinTech and blockchain lead startup investment

Written by Hannah McGrath
05/02/2019

FinTech and blockchain startups led the field in attracting investment in 2018, according to a survey which also showed that the overall amount of equity poured into the UK’s startups slowed by 19 per cent last year to £7 billion.

A report on equity investment conducted by Beauhurst, a data provider, found that overall investment in startups and small and medium-sized enterprises (SMEs) was down to £7 billion from £8.6 billion in 2017, while the total number of deals dropped to 1,572 from 1,744 in 2017. The average size of investment also fell by 15 per cent across the boards.

However, against the gloomier backdrop for investment activity on the whole, 2018 proved a breakaway year for emerging FinTech and artificial intelligence (AI) sectors.

Overall, FinTech companies raised a total of £1.27 billion in funding in 2018, down slightly from £1.28 billion in 2017. A total of 26 investment rounds topped the £50 million mark, including Revolut’s £180 million mega-raise in April and the £149 million invested in Atom Bank in March.

There was a record 75 per cent rise in the number of blockchain deals in 2018 - marking the first year the distributed ledger technology has overtaken advertising technology (AdTech) firms for investment.

AI continued to be a major growth area for venture capital, with 87 deals in 2018 with a total value of £686.2 million, up from the 103 deals which amounted to the lower value of £422.9 million in 2017.

Henry Whorwood, head of research at Beauhurst, said: “As we enter a period of unprecedented political uncertainty, it is tempting to interpret these [overall] numbers as the beginning of a more pronounced decline - but when looking into the data underlying these figures, the prognosis is much more nuanced.

“The huge spike in the amount invested into more established companies in 2017 captures a large number of high-value ‘megadeals’ that could be considered unusual – the 19 per cent fall in the amount invested between 2017 and 2018 must be understood in this context.”



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