UK Fintech investment drops by more than a third

Investment into UK fintech firms has slumped by more than a third in the latest sign of challenging conditions facing the sector.

A total of $2.9 billion was invested across 199 deals in the UK in the first six months of 2023, a drop of 37% compared to the last six months of 2022, according to a report by Innovate Finance. That is a much steeper decline than the 14% drop in total capital invested in Fintech globally.

Of those 199 deals, 111 worth $2 billion took place in the first quarter, while a further 88 deals took place in the second quarter representing $864 million, in signs investment is continuing to slow.

However, the UK held on to its position as the second biggest global destination for fintech investment, behind the US which remains top with $15.6 billion invested across 663 deals.

Janine Hirt, CEO of Innovate Finance, said: “The drop in global and UK FinTech investment is an expected result of the current economic landscape, reflecting the cautious investor sentiment as seen across equity markets over the last 12 months.

“[But] the UK is still receiving more investment in FinTech than all of the rest of Europe combined, which is a testament to our amazing community of innovators and entrepreneurs.”

Despite investment falling, the average deal size in the FinTech sector has increased compared to pre-pandemic levels. In the first half of this year, the average deal size stood at $15.9 million, on par with 2022’s $16.5 million and well above 2020’s average of $12.6 million.

For the first time, four of the top ten markets are in Asia, with China in 3rd place attracting $1.7 billion, Singapore in fourth position with $764 million, India in 7th position with $729 million and South Korea in 10th position attracting $390 million.