UK FinTech Investment Landscape Unfazed by 2022
UK FinTechs received $12.5 billion in investment in 2022, 8% less than the previous year.
According to research published by Innovate Finance, an independent industry body representing the UK FinTech community, this week, the drop signals a remarkably resilient FinTech ecosystem compared to the global average, which saw investment activity fall by 30%.
As in previous years, only the US attracted more FinTech investment than the UK, raising over $39 billion. Rounding out the top five were India, which brought in $5.5 billion, Singapore with $4 billion and Germany with $2.9 billion.
Also, the $12.5 billion raised by UK-based firms in 2022 is more than the FinTech investment secured by the next 10 European countries combined.
As a global financial hub, London took the lion’s share of UK FinTech capital, raising $10.2 billion in 2022, but down 5% on the previous year. In fact, London-based companies secured two of the five highest-value FinTech funding rounds of the year.
One of them was FinTech unicorn Checkout.com, which exactly one year ago on January 12 announced that it had raised $1 billion in a Series D round that valued the startup at $40 billion. About a month later, wealth management platform FNZ announced a $1.4 billion capital raising to accelerate its global expansion.
But as the macroeconomic crisis worsened last year, the resilience of the local FinTech sector was tested, with companies unable to fully hedge against the global downturn in venture capital (VC) investment.
In fact, after a sharp drop in VC activity in the second half of the year, Checkout.com was forced to cut its internal valuation by 72% in December.
The UK government supports the industry
Macroeconomic headwinds aside, a strong culture of innovation, a well-established financial services sector, and the ongoing flow of talent and ideas between the country’s various technology sectors continue to contribute to the UK’s leading position on the global FinTech scene.
Commenting on the latest Innovate Research findings, the country’s Digital Economy Minister Paul Scully said that “despite global headwinds, UK FinTech firms showed great resilience last year and helped boost the UK’s status as a world leader in technology.”
He added that in 2023, “the country is focusing on maintaining this leadership by supporting start-ups, increasing digital skills and making this country an even more attractive destination to establish, grow and invest in technology companies.”
Taking a proactive stance, the government has sought to attract investors and cultivate the FinTech sector by signing Memoranda of Understanding with other countries to facilitate digital trade and encourage cooperation in the space.
In the latest example of such international agreements, on Monday (January 9), the government signed a Memorandum of Understanding with the Securities and Exchange Commission of Thailand to promote cooperation on FinTech and sustainable finance between the two nations.
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