UK fintech funding ranks second globally despite drop in volumes
UK fintech funding ranked second across the world in the first half of 2023, despite a 78 per cent year-on-year drop in investment volumes.
Research from market intelligence platform Tracxn found that UK fintechs raised $2bn (£1.5bn) in the first six months of this year, down from $9.1bn in the first half of 2022.
However, the UK remained in second place as the decline in fintech investment is mirrored worldwide, Tracxn said.
The first quarter of 2023 was the least funded quarter for UK fintechs since 2020, at $673m.
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$1.13bn was raised in the second quarter, making up almost two thirds of the first-half funding.
Tracxn also noted a dearth of initial public offering (IPO) activity in the sector.
Only one UK-based fintech went public in the first half of 2022, after which there were no IPOs in the following 12 months.
However, 43 acquisitions were recorded in the first six months of 2023, as against 40 in the second half of2022 and 44 in the first half of 2022.
“Cryptocurrencies, regtech and banking tech are the top-performing segments in the fintech sector, based on funding in the first half of 2023,” Tracxn said.
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“The cryptocurrencies segment is the highest-funded segment, accounting for almost 34 per cent of the total funding received in the UK fintech space in the first half of 2023. While funding into cryptocurrency startups across the globe is witnessing a declining trend, the UK region is showing promise as the highest funded segment in the sector.”
Augmentum, Lloyds Banking Group and Triple Point were the top investors in the UK fintech space in the first half of 2023, Tracxn found.
Triple Point, Forward Partners and Founders Factory were the lead investors in seed-stage investments.
CommerzVentures, Augmentum, and Northzone were the most active investors in the early stage, while HSBC Corporate Ventures, SoftBank Vision Fund and Rocket Internet were the most active investors in the late stage.
