UK FinTech Investment Landscape Unfazed by 2022

UK FinTech Investment Landscape Unfazed by 2022

U.K. FinTechs received $12.5 billion in investment in 2022, 8% less than the year prior.

According to research published by Innovate Finance, an independent industry body representing the UK FinTech community, this week, the drop signals a remarkably resilient FinTech ecosystem when compared to the global average, which saw investment activity decline by 30%.

As in previous years, only the U.S. attracted more FinTech investment than the U.K., bringing in a total of over $39 billion. Rounding off the top five were India, which raked in $5.5 billion, Singapore with $4 billion and Germany with $2.9 billion.

What’s more, the $12.5 billion raised by U.K.-based firms in 2022 is more than the FinTech investment secured by the 10 subsequent European countries combined.

As a global financial hub, London took the lion’s share of the U.K.’s FinTech capital, collecting $10.2 billion in 2022, although down 5% compared to the previous year. In fact, London-based companies secured two of the five highest-value FinTech funding rounds of the year.

One of them was FinTech unicorn Checkout.com, which exactly a year ago on Jan. 12 announced that it had raised $1 billion in a Series D round valuing the startup at $40 billion. About a month later, wealth management platform FNZ announced a $1.4 billion capital raise to help accelerate its global expansion.

But as the macroeconomic crisis worsened last year, the resilience of the local FinTech sector was tested, with businesses unable to fully hedge against the global slowdown in venture capital (VC) investment.

In fact, following a sharp drop-off in VC activity in the second half of the year, Checkout.com was forced to slash its internal valuation by 72% in December.

UK Government Supports the Industry

Macroeconomic headwinds aside, a strong culture of innovation, a well-established financial services sector, and the ongoing flow of talent and ideas between the country’s diverse tech sectors continue to contribute to the U.K.’s leading position in the global FinTech scene.

Commenting on the latest Innovate Research findings, the country’s digital economy minister Paul Scully said that “despite global headwinds, British FinTech firms showed great resilience last year and helped boost the U.K.’s status as a world leader in tech.”

He added that in 2023, the country is “focusing on maintaining that lead by supporting startups, boosting digital skills and making this country an even more attractive destination to found, grow and invest in tech businesses.”

Taking a proactive stance, the government has sought to attract investors and cultivate the FinTech sector by signing Memoranda of Understanding with other countries to help ease digital trade and encourage collaboration in the space.

In the latest example of such international agreements, on Monday (Jan. 9), the government signed a Memorandum of Understanding with the Securities and Exchange Commission of Thailand to promote collaboration on FinTech and sustainable finance between the two nations.

 

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