UK Fintechs attract $24.5bn investment in the first half of the year

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Hello and welcome to CFTE’s Fintech Shot – a curated newsletter about what matters in Fintech!

It’s raining pounds in the European fintech hub – the United Kingdom (UK). While the UK has never been one to shy away from the investor limelight, things seem to be heating up in the Fintech funding arena.

So what are the reasons? Read ahead…

What is the state of Fintech investments in UK?

Investments in UK Fintechs have reached an all-time high as the industry attracted $24.5bn in the first half of 2021 with the highest volume of deals on record. These investments spanning across private equity (PE), venture capital (VC) and M&A deals, have shot up in the first half of 2021 – a four-fold increase from $5.9bn in the whole of 2020. What’s fuelling investor appetite?

Why are investments flowing into the UK?

As the country reemerges from a turbulent, crisis-ridden 2020, there’s a new momentum speeding up investments, as confidence in the industry is reinstated.

There’s also a ‘race to digital’ (courtesy of the COVID-19 pandemic), and major banks are not planning to lose. They are siphoning their investment funds toward digitalisation, spurring corporate investment in the fintech sector.

And we certainly can’t ignore the impact of the Khalifa review in the first half of 2021 that laid down the recommendations for the future growth of the sector, ensuring long-term sustained investments for the fintech ecosystem.

Who’s cashin-in the big bucks in H1 2021?

The first half of 2021 also saw 13 mega deals (investment above $100m) in fintech companies, surpassing the previous record of 10 in 2019. Who were the lucky few and which sectors did they hail from?

A table of UK's 13 invesment megadeals in Fintech

Going beyond: what other countries see significant investment since the beginning of the year?

Taking a step back to look at global fintech funding, we see a significant surge from $87.1 billion in H2’20 to a record $98 billion in H1’21.

Analysing UK’s fintech fundraising against some of the other leading nations shows that the UK ($24.5bn) alone attracted significantly large funding compared to their counterparts in EMEA combined ($39.1bn).

In Europe, UK took the lead, with the Nordic region taking second place with $4.8bn investments in fintech. The Americas led globally with $51.4bn in investments, accounting for half of the global fintech investments.

KEY TAKEAWAYS

  • Investors are splurging on the Fintech sector in the UK and globally in a post covid confidence boost.
  • The payments sector is hot in the UK bagging more than half of the mega fundraising rounds.
  • The UK’s regulatory landscape and investor appetite has made the country more attractive for Fintech investments than its counterparts in the EMEA region attracting nearly 63% of the region’s funding alone.

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