UK named top spot for FinTech with $4.1bn investment

The UK has once again been named the top destination for capital in Europe, hitting $4.1 billion (£2.9 billion) total investment across 408 deals, according to 2020 figures from Innovate Finance.

Although globally the UK came second to only the US in total capital raised, investment in British FinTech dropped 9 per cent, perhaps an expected outcome given the impact of the coronavirus pandemic.

Total global FinTech investment hit $44 billion across 3,052 deals, an increase of 14 per cent.

The US attracted investment of $22 billion, up 29 per cent, while Indonesia ranked third with $3.3 billion.

India came in fourth place globally, with $2.6 billion total investment.

The UK dominated European FinTech investment, accounting for just under half of the total $9.3 billion, and with more deals and capital invested than Germany, Sweden, France, Switzerland and the Netherlands combined.

In Europe, Germany was second with $1.4 billion of investment across 71 deals, up by 50 per cent.

Sweden ranked third with $1.3 billion of capital raised, with France ($522 million) and Switzerland ($294 million) just making the top five.

The largest investments in Europe were made by payments company Klarna in Sweden ($650 million), challenger bank Revolut in the UK ($580 million) and N26 in Germany ($570 million).

London-based firms attracted 91 per cent of capital invested in UK FinTech, receiving $3.8 billion across 310 deals.

Investment backing for female founders in UK FinTech grew to $720 million in 2020, accounting for 17 per cent of total investment – an increase from 11 per cent compared to the previous year.

“Given the tough and turbulent year we’ve experienced, it’s very encouraging to see strength and resilience in the global FinTech sector’s ability to raise capital,” said Charlotte Crosswell, chief executive, Innovate Finance. “Now more than ever, we should celebrate the strong position the UK has carved out at an international level. We are a world-leading FinTech hub, and as the figures reveal, the epicentre of FinTech in Europe – despite the many challenges thrown our way.

She added: “The pandemic has created new barriers for many companies seeking funding, so it is all the more vital that we support our innovative companies to fuel their future success and growth. The upcoming FinTech Strategic Review is a key step on that path that will help to ensure long-term, sustained investment.”

Josep Alvarez, UK head of banking practice at NTT DATA UK and everis, said: “The fintech sector is a fantastic UK success story, envied around the world. This data makes clear that investors are still convinced that the UK’s unique blend of tech talent, deep financial services expertise, and continued government support for the fintech sector, makes the UK market an attractive destination for their capital.”

He explained: “The success of UK fintech is all the more notable given the economic turbulence of 2020. Mega-deals for UK firms like Revolut point to a recognition amongst investors that the digital economy, particularly fintech, will be a driving force of the economic recovery when the pandemic begins to fade.”

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