Fintech investment in the UK fell significantly in the third quarter of 2022
The UK fintech industry has been one of the most vibrant and fastest growing in the world in recent years, but there are signs that new investment levels are falling, so what has happened and what does this mean for the future?
The latest figures
Research by Beauhurst and Deloitte has revealed that the amount of equity investment in UK fintech companies fell dramatically in the last quarter. From £2.13 billion in the second quarter of this year, it fell to just £491 million in the third quarter.
Not surprisingly, the number of individual investment deals executed during that time also fell. The main reason for this is the difficult economic situation over the course of the year, where some new players in the industry have to stop their operations before they even get started.
This has led to fears that the industry may face a tough period in the coming quarters until the economic situation improves and more money flows in. Part of the problem is that the valuation of new businesses has largely fallen, and this has been a problem. around the planet rather than just in the UK.
For example, the Swedish start-up company Klarna had to cut its valuation by almost half in order to raise more new capital in June this year. Less well-established companies have found it even more difficult and some have had to put their financing plans on hold until the situation improves.
Undoubtedly, the spectacular results posted by this industry in 2021 have worked to make this year’s funding numbers seem less impressive. $27.8 billion was poured into UK fintechs in the first half of last year, but by 2022 this had fallen to $9.6 billion, according to a study by KPMG.
The best ideas will continue to attract new money
While the numbers are disappointing, it’s clear that the best new fintech ideas will continue to attract the investment they need. When we look at some of the most interesting startups in this sector in recent times, it is clear that they have appealed to investors through various financial situations.
For example, eToro had 16 successful funding rounds, raising over $320 million. An eToro review confirmed that they have more than 20 million users and one of the largest social trading communities on the internet. It is an Israeli fintech that was established in 2007 and offers the likes of 0% fees on stock trading and the possibility of social trading.
This look at the best fintech startups in London features companies such as Soldo and Transferwise. Soldo provides a prepaid business card for expenses and in 2019 had raised $82 million in funding. As for Transferwise, they provide a way to send money abroad at a low cost, and they had ten rounds of funding to reach the title of Europe’s most valuable fintech.
The current economic struggles are making it harder for fintechs to raise funds, but we can expect to see those with the best ideas and strongest business models find a way to move forward with their plans anyway.
