Fintech Investment Reached $102bn in 2021

• Sector bounces back from pandemic – 217% overall YoY investment increase in the UK, and 237% outside London and SE 
• Total capital invested in FinTech globally reaches $102bn – a 183% annual increase
• Latest data from Innovate Finance reveals the UK remains second globally in FinTech investment, behind only the US

New data released by Innovate Finance, the industry body representing the UK FinTech industry, has revealed the 2021 global FinTech investment trends.

https://twitter.com/InnFin/status/1479022484460650499

The UK has registered a record year in annual FinTech investment in 2021, exceeding $11.6bn – representing a huge 217% increase from 2020.

This correlates with the substantial global increase in investment levels, with the total capital invested around the world in 2021 standing at $102bn – a 183% YoY increase.

The majority (61%) of all global capital has been invested in later stage growth funding.

The UK’s $11.6bn total represents 11% of all global capital invested this year, which is a slight increase from the 10% figure in the previous two years.

The funds in the UK were spread across 713 deals, which marks 11% of all global deals (6,495).

Overall, the US leads the way globally, bringing in $46bn in FinTech capital, with the UK firmly in second place. The top five in the world were rounded off by India ($6.3bn), Germany ($4.4bn), and Brazil ($3.8bn).

Other key global and UK data insights included:

• UK dominates the European scene – The UK is far and ahead the biggest FinTech draw in Europe for investors, followed by Germany ($4.4bn), France ($2.3bn), Sweden ($1.7bn) and the Netherlands ($1.6bn). Overall, $24.3bn was invested across the continent in 2021, with the UK representing nearly half (45%) of all investment.
• Europe and Americas lead on mega deals – Amongst the global top 10 was Revolut from the UK. Amongst the world’s 234 mega rounds ($100m+), 32 were from the UK, equivalent to the whole of the rest of Europe (31) and behind the US (103 deals).
• UK regions seeing rapid growth – Investment outside London and the South East in 2021 was $696m compared to $206m in 2020 – a 237% increase.
• UK still lacking growth capital – The majority of funds backing UK companies went into early ($2.7bn) or late stage ($7.0bn) rounds, with a smaller share of funding at the growth stage level ($1.6bn). However, by number of deals, the Seed stage (<$1m) saw a decrease in funding whereas all other stages saw an increase compared to 2020.
• The UK’s top deals – Amongst the UK’s top deals in 2021, the top five in size were represented by Revolut, Monzo, Copper, Checkout.com and Starling
• Female funding gap persists – UK female FinTech founders received 9% of all capital invested, which is a 3.4x increase from 2020, but broadly the same proportion of the whole – representing a sustained level from 2020, and a drop from 13% in 2019.

The trends reveal that amongst FinTech verticals in the UK, payments, challenger banks, and digital assets were all active in raising capital in 2021 – testament to the diversifying and maturing FinTech space developing in the UK.

The increasing levels of regional investment indicate promising signs that UK Fintech is growing beyond London, and areas throughout the UK are fast establishing strong regional hubs.

Following a challenging year in 2020 impacted by the pandemic, which saw the investment numbers for the UK stagnate for the first time in years, the 2021 figures represent a substantial annual jump and a validation of the sector’s strategic potential as it emerges from the pandemic.

Latest research shows that FinTech products are now being used by 8 in 10 UK Brits, showing a huge level of market penetration. During the pandemic, the sector has become increasingly important for both the UK’s economy and society – supporting individuals and businesses alike.

The record investment figures come off the back of a milestone year for FinTech in the UK, with the release of the Kalifa Review at the start of 2021. The Review set out recommendations and a roadmap for the continuing growth of the sector through the collaboration of industry, government, and regulators.

Janine Hirt, CEO of Innovate Finance, said: “The impressive investment figures speak for themselves – it’s been a superb year for FinTech in the UK, and indeed all around the world. The huge increase in funding levels is testament to the world-class innovation and ingenuity that’s driving forward and positively transforming financial services. FinTech is delivering on all the biggest global trends and needs, including business productivity, consumer behaviours, financial wellness and inclusion, climate change solutions and cyber security – which is why it is such a magnet for investors.

“Our FinTech sector is reaching new levels of maturity, and investors are responding to the growing market demand for the products and services our entrepreneurs are able to provide. We are on the right trajectory in terms of levels of funding and now it’s time to also properly address the funding gap for underrepresented founders, if we are to create a truly sustainable and forward-looking sector.

“We look forward to a continued strong FinTech performance in the UK. The UK Government and regulators have been quick to implement many of the investment and listings reforms recommended by the Hill and Kalifa Reviews, which make the UK even more attractive for global capital, and provide the basis for far greater investment by UK institutional investors.” 

 Lord Gerry Grimstone, Minister for Investment, said: “2021 was a first-class year for UK investment.

“We hosted the Global Investment Summit, which secured nearly £10bn investment into our industries of the future.

“And we proved that the UK fintech sector is more than a force to be reckoned with, maintaining our position as the number one fintech investment destination in Europe, and number two in the world, second only to the US.

“Thanks to our welcoming business environment and our world-class fintech ecosystem, we more than doubled 2020’s fintech inward investment figures, with more than 10% of deals worldwide landing on UK soil.

“A fantastic achievement with even more to come!”

Source: Innovate Finance