London FinTechs still attracting funding, despite COVID

Investors are continuing to fund London-based FinTechs, despite the pandemic, according to latest data from London & Partners and Dealroom.

The capital's FinTech sector attracted $3.6 billion in venture capital investment between January and September, putting London in second place globally, behind San Francisco with $5.1 billion and ahead of New York’s $2.2 billion.

The UK capital takes the top spot for deal count with 169 deals so far this year, followed by San Francisco with 107 deals. Paris came in second in Europe, with 40 deals.

Although global investment flows around the world are below last year’s levels, London’s FinTech firms have already topped the 2018 venture capital investment total of $2.3 billion. In the first half of 2020, London-based firms also claimed 57 per cent of European venture capital investment into the space.

FinTech remains one of London’s largest and best performing sectors, accounting for 44 per cent of all venture capital investment into London’s tech companies so far this year.

Laura Citron, chief executive at London & Partners, said: “World-leading FinTech scale-ups were born in London out of the 2008 financial crisis and today London’s FinTech companies are innovating to respond to changing demands caused by the pandemic."

Home to 2,183 FinTech firms - more than any other global city - London is also has 17 of the UK’s 23 FinTech unicorns.

Out of the $3.6 billion invested into London FinTechs so far this year, $2.2 billion came from 50 funding rounds including at least one US investor, accounting for 61 per cent of the total. This was up from 32 per cent in 2019, when $1.6 billion of the total $5.1 billion venture capital investment into London FinTechs included a US investor.

Funding rounds including a US investor also tend to be significantly larger in value than those with no US backing, with the average deal value involving US investors at $44 million, compared to $12 million without.

Major funding rounds for London FinTech companies involving US investors this year include a $500 million Series D funding round for Revolut, which involved US investment firms Technology Crossover Ventures and Ribbit Capital, and a $150 million Series B funding round for Checkout.com, led by New York-headquartered firm Coatue.

Despite the global slowdown of foreign direct investment over recent months, FinTechs are continuing to look both ways across the Atlantic. Last week, several took part in a virtual trade mission to North America, hosted by the Mayor of London’s International Business Programme.

London-based scale-ups 11:FS, iProov, Tyk, ABAKA, SteadyPay, ClauseMatch, EmpowerRD, Paid, Recordsure, Suade Labs, Fiskl and Ten10 Group spent four days visiting six US states, pitching to banks and investors across North America.

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