UK fintech has seen a lot of success in the last 10 years, creating over 75,000 jobs and becoming one of the strongest fintech markets globally. However, the last few years have shown a downward trend in fintech investment and 2024 is no different according to Innovate Finance, the UK fintech community representative.
The total capital invested into fintech globally reached $15.9billion in H1’24. This is a decrease of 19 per cent compared to H2’23. The final six months of 2023, saw total investment amount to $19.5billion. In H1’24, 1,566 fintech deals saw investment. In H2’23, there were 1,661 deals. There was a shift towards earlier stage deals (Seed to Series B) and the average deal size was $10.2million, reflecting a return to early-stage investments.
Janine Hirt, CEO at Innovate Finance
Janine Hirt, CEO of Innovate Finance, commented on the findings: “Despite a challenging investment landscape in the first half of 2024, the UK fintech sector maintains its position as a global hub for investment, second in the world behind only the US, and maintaining an undisputed leading position in Europe.
“We believe the decline in investment since the 2022 peak may have bottomed out. However, the market has not yet shown that it has turned and this may not start until 2025. When it does turn, the UK’s challenge is to make sure we can maintain and grow our market position, which is not guaranteed. We continue to work with industry, regulators and policy makers to maintain the UK’s leadership and ensure the necessary investment is in place for the UK to attract critical growth funding.”
Regional trends
Overall, the US received the most investment in H1’24, bringing in $7.3billion in fintech capital across 599 deals, with the UK firmly in second place with $2billion and 183 deals, rounded off by India with $837million and 78 deals, China with $589million invested across 30 deals and Germany with $462million invested across 37 deals.
In the first half of 2024, the UK received $2billion of investment, 37 per cent down on the previous six months. However, this was still more investment than all other European countries combined, representing 12.7 per cent share of the global market. Over the last 12 months, UK investment was also above pre-Covid investment levels of 2018 and 2019.
Female-led fintechs in the UK received $136 million in investment across 42 deals in H1’24, which represents c. seven per cent of the UK total of $2billion, a decline from the 10 per cent reported in the full year 2023. Across the top 10 global markets, the top three countries continue to be the United States, United Kingdom and India, whilst France is no longer in the top 10.
UK and global fintech investment have reached a cyclical low point from their 2022 peak, in parallel with the general global VC market. The data is inconclusive as to whether the market has reached the bottom. There are some leading indicators that suggest investors are returning to markets, for example the London Stock Exchange saw a welcome increase in equity issuance in H1’24 compared to the second half of 2023.
Regulations must be top of mind to keep the frontrunning position
Hirt continued: “The latest investment figures show increasing global competition for fintech investment, demonstrating the ever greater need for the UK policy and regulatory environment to take action to maintain our lead in fintech and in financial services more widely. Moreover, with political uncertainty affecting investment elsewhere in the world, the UK has a window of opportunity to forge ahead.
“We have also published our ‘FinTech Plan for Government’, which sets out priority actions to maintain the UK’s global leadership in fintech and unleash fintech’s contribution to the government’s mission to grow the UK economy and create opportunity for all.”
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