UK FinTech continues to dominate Europe

By Robin Amlot

Innovate Finance, the industry body, reports that the UK FinTech sector retaining its role as the top-ranking investment destination in Europe in 2020, with $4.1bn venture capital and growth private equity invested across a total of 408 deals It does nevertheless represent a YoY drop of 9% although, in global terms,  UK FinTech ranks second only to the US in total capital raised. Overall, global FinTech investment for 2020 was up 14% at $44bn across 3,052 deals.

The US attracted investment of $22bn, up 29%, while Indonesia ranked third with $3.3 billion and India fourth with $2.6bn. UK FinTech dominated European investment, accounting for just under half of the total, with more deals and capital invested than Germany, Sweden, France, Switzerland and the Netherlands combined.

Within Europe, Germany was second with $1.4bn of investment across 71 deals, up 50%. Sweden ranked third with $1.3bn of capital raised, with France ($522m) and Switzerland ($294m) closing out the top five.

Among global deals, the top three FinTech investment rounds were secured by Gojek in Indonesia ($3bn; payments and ride-hailing platform), and Stripe ($850m; payments) and Chime ($700m; challenger bank) in the US. The largest investments in Europe were secured by payments company Klarna in Sweden ($650m), and challenger banks Revolut in the UK ($580m) and N26 in Germany ($570m).

London-based firms attracted 91% of capital invested in UK FinTech, receiving $3.8bn across 310 deals. Among these, Revolut led the way with the largest UK deal ($580m), followed by Molo ($343m), and Monzo ($166m).

Investment backing for female founders in UK FinTech grew to $720m in 2020, accounting for 17% of total investment – an increase from 11% of the total in 2019.

Charlotte Crosswell, CEO of Innovate Finance, said: “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. 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.

“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, commented: “The UK 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. 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.”

The bullish investment figures counter a downbeat report in 2020 suggesting annual losses among FinTech startups in the UK are running at around £1.5 billion.