2017 set to be record year for UK fintech investment
London is Europe’s leading fintech hub, according to recent investment data from London & Partners. Global investors continue to pump ge sums of money into London fintech companies with the research revealing that 2017 is set to be a record year for investment into both London and the UK’s fintech sectors.
Over $1bn (£825m) has been poured into the UK’s financial technology companies since the beginning of the year, with double the amount raised compared with the same period in 2016. The research also suggest that British companies are on course to raise more money in 2017 than the records set in 2015, with the data showing firms have already received more investment than the first three quarters of 2015.
London continues to provide a major boost to the UK’s fintech sector, with London firms raising over $980m (£769.41m) and accounting for over 90 per cent of all investment into fintech companies across the UK in 2017.
The findings have been released to coincide with an upcoming trade mission of London financial technology companies to Money 20/20, the world’s largest fintech conference. Led by the Mayor’s International Business Programme, a delegation of 12 of London’s fastest growing fintech companies will showcase themselves at the global trade show and explore investment and expansion opportunities in the US market.
Companies joining the delegation include foreign exchange banking app, Revolut, which recently raised $66m in Series B funding and AI based ID verification app Onfido that received $30m in funding in September this year. Other London fintech businesses on the trade mission include: Divido, Fluidly, Vega One, Fractal Labs, Monese, PixelPin, Smarkets, Starling Bank, Sthaler and Yoyo Wallet.
London’s Deputy Mayor for Business, Rajesh Agrawal, said: “London remains a world leader in fintech and the companies on the Mayor’s trade delegation are at the forefront of this exciting sector. More than £1bn in venture capital has been invested into London’s fintech sector since the EU referendum – this is yet more proof that global investors believe London will remain a leading fintech hub for many years to come.”
“Clearly, Brexit poses major challenges – but London’s position as a global financial centre and world-class technology hub is built on strong foundations which cannot be replicated anywhere else: access to more software developers than Stockholm, Berlin and Dublin combined, Europe’s largest fintech accelerator Level 39, and the continent’s only truly global financial market.”
“This highlights the need for a Brexit which enables London to maintain its place at the heart of the single market, as Europe’s financial capital.”
Nikolay Storonsky, CEO of Revolut added: “Whether you look at it from the perspective of talent, infrastructure, access to capital or the excellent regulatory environment, London is without question the best city in the world to launch a fintech startup. In just two years, Revolut has raised over $90m in investment and attracted over 900,000 users. There is no doubt in my mind that a large part of our success is down to choosing London and the UK as our headquarters and home.”
Further analysis of London & Partners investment data shows that global investors continue to see London as a leading hub for fintech despite Brexit, with London fintech companies attracting over $1 billion in venture capital funding since the EU referendum vote.
In the past five years London’s fintech sector has received more than five times the amount of investment than any other major European city. Since 2012, London fintech companies attracted more VC money than Paris, Frankfurt, Berlin and Amsterdam combined.
London has also seen significantly more venture capital investment than many other global fintech hubs including Hong Kong, Mumbai and Singapore. Global investors still see San Francisco, Beijing and New York as the top three hubs for fintech but London is the fourth largest globally.
Separate research from specialist banking and investment firm, Investec, confirms London’s global appeal, with the findings showing that over one third of investors into London’s fintech sector in 2017 were based overseas. The data also shows that the proportion of non-EU based investors into London fintech companies has increased significantly since last year.
Kevin Chong, Investec’s Co-Head of Emerging Companies said: “Reaffirming the global appeal of London’s Fintech sector, in 2017 we have seen a large number of international investors invest in London Fintechs who have not invested in London previously.”
“So far in 2017 we have co-invested in Fintechs with a leading Asian private equity and venture capital firm, two Spanish banking groups, and senior executives from a leading Asian payments technology platform.”
At a national level, the United States leads the way for fintech investment with over $25bn worth of VC funding over the last five years. China ranks second globally with a significant increase in investment over the last few years taking its total to over $14.5bn. The UK remains the largest fintech hub in Europe and the third largest globally, with British firms attracting over $3.8bn since 2012.
London continues to attract major investments from global financial services firms, with the recent news that Capital One has opened a new office in Shoreditch last month. The new 22,000 square foot office will house up to 200 staff, as Capital One UK looks to take advantage of London’s high concentration of software developer talent. This follows the news in August this year that Deutsche Bank has pledged its long-term commitment to the capital with the signing of an extended lease for its London headquarters.
Speaking about Capital One’s recent investment in London, Amy Lenander, Capital One UK’s CEO said: “Our move to White Collar Factory is a key part of our drive to put digital and tech capabilities at the core of our business strategy.
“The new office puts us at the heart of London’s innovation and fintech hub, making it easier to recruit from one of the best talent pools in the world and to integrate into the London tech community. This move will play a pivotal role in our future success in the UK.”
In a further vote of confidence for London’s financial services sector, London retained the top spot ahead of other rival cities Singapore, New York and Tokyo in Z/Yen’s latest Global Financial Cities Index ranking. The report praised London’s infrastructure, access to high quality staff and the high concentration of financial service firms across the city. According to TheCityUK, there are more head offices of banks in London than any other place in the world, employing 150,000 people.