Britain’s financial technology industry shrugged off the Brexit vote, attracting more than double the amount of venture capital investment last year than in 2016, according to new data published on Wednesday.
Fintech companies, such as TransferWise and OakNorth, raised $1.8bn of venture capital investment last year, up more than 150 per cent from $704m in 2016, the year of the UK’s vote to leave the EU, the data show.
The surge in UK funding contrasted with an 18 per cent drop in global fintech investments to $14.4bn, according to the report by Innovate Finance, the British fintech trade body.
The UK industry was boosted by handful of large fundraisings of more than $90m. The biggest was by TransferWise, a cross-border payments provider, which raised $280m. OakNorth, a digital lender to small businesses, raised $203m.
The three next largest UK fundraisings were by Funding Circle, the peer-to-peer lender to small businesses; Interactive Investor, an online trading platform; and Monzo, the mobile banking app. Digital banks, money transfer operators and foreign exchange providers attracted 45 per cent of investment in UK fintechs.
The UK overtook China to take second place worldwide, behind the US, which attracted $7bn of VC money into its fintech sector, securing top spot again. The number of VC investments in fintech fell more than a quarter to 1,824. The biggest fintech fundraising globally was the $500m raised by SoFi in the US.
There had been fears that the Brexit vote would hit investor confidence in the UK’s nascent fintech sector and cause funding to dry up for some start-ups.
Fintech companies have been worried that their access to skilled workers from Europe could be reduced if immigration were restricted after Brexit happens in March 2019.
“There is no doubt that London’s position as a leading financial and technology centre is driven by the UK’s focus on policy and talent, allowing us to attract the entrepreneurs and investors that are bringing real, positive change to the world of fintech,” said Charlotte Crosswell, chief executive of Innovate Finance.
A separate report on Wednesday by research firm Beauhurst found that equity investment in UK start-ups and high-growth companies across all sectors also more than doubled in 2017 — to £8.3bn.
Average investment size rose 93 per cent rise to £6.8m, while foreign investors committed a record £5.9bn in funding. Beauhurst added that “huge deals may be slowing exits” as equity-backed companies opt for bigger fundraising rounds over listing publicly.
Additional reporting by Hannah Murphy
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