In further evidence of this rebound, the UK accounted for around half of Europe’s total VC fintech funding in the quarter, something it came close to achieving in Q1.
The UK has seen its economy contract sharply over the past few months, but these latest numbers suggest investor confidence in the country’s fintech industry hasn’t been affected.
UK fintech funding performed well on all fronts in Q3:
- Funding volumes saw an impressive jump. UK fintech funding rose 107% between Q2 and Q3, from $173 million to $358 million. This follows a 49% drop in funding between Q1 and Q2. The number was likely even higher, as CB Insights only included VC investment, skipping over significant direct investment rounds like Goldman Sachs’ $133 million investment in alt lender Neyber, and Ping An’s $46 million investment in 10x Future Technologies.
- Deal numbers surged upward. UK deal numbers jumped 106% between Q2 and Q3, from 18 to 37. This is a marked contrast to the 40% decline observed between Q1 and Q2. The significant rise in deals suggests that, despite growing consolidation in some fintech sectors like automated investment, investors are still spreading their support across a wide range of players in the UK market.
These figures indicate that a more even distribution of European fintech funding may take longer than anticipated. With alternative fintech hubs developing in France, Sweden, and especially Germany, it’s seemed for some time that these countries would gain more influence on the European stage, resulting in more deals outside of the UK and a more diversified funding landscape. However, the likeliest contender, Germany, saw its funding plunge 77% between Q2 and Q3, while its deals dropped 50%, suggesting the UK will continue to dominate European fintech, for now. That said, this could change if the current trend of big banks increasingly shifting their operations out of the UK continues, as this could lead fintechs to follow the financial services system overseas.
- Explains why the profitability question is increasingly being raised.
- Outlines why fintechs in different segments are failing to turn a profit.
- Gives examples of just how large some fintechs’ losses are.
- Explores how fintechs are striving to solve the profitability problem.
- Outlines vital considerations for fintechs and their investors.
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