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UK fintech startups raised £40 million in July, showing Brexit hasn't killed the hot sector
Revolut
British fintech startups have announced at least £40 million of investment in just over a month since the referendum on the UK's membership of the European Union, according to an analysis by Business Insider.
Nine funding deals in the fintech sector totalling £40.6 million have been announced since June 23, when Britain shocked the world by voting to leave the European Union.
While the figure should help to allay fears of a post-Brexit fintech slowdown, most of the deals will have been in the works for months and so may not be the best indication of investor confidence post-referendum. However, the fact that these deals weren't called off in the wake of the vote is a positive sign.
Investment is holding steady at the same rate as the start of the year. A report from KPMG earlier this year showed $162 million (£110.8 million) was invested in 15 UK-based fintech startups between January and April
'Momentum didn't slow'
Eileen Burbidge, a partner at early stage London VC firm Passion Capital and the government's special fintech envoy, told BI: "It's early yet to measure the actual impact of Brexit on financing since those transactions can take three or more months to complete (so many of the deals announced in July were already in the works).
"But it's great to see the momentum didn't slow in the run-up to the referendum, and that companies and investors are keen to be so vocal about their commitments and ambitions. In a Brexit context regarding fintech specifically, I'm confident the UK will continue to lead the world and don't foresee investment in this UK sector declining."
Polish and Swedish investors took part in two of the deals, showing European investors are undeterred by Brexit. There have also been two significant crowdfunding raises, showing the UK population is still willing to back high-risk startups despite increased uncertainty.
Independent research released this week and commissioned by private equity house IW Capital and crowdfunding specialist Crowdfinders found that 52% of the 1,000 UK investors surveyed still keen to invest in the UK's small and medium businesses in the wake of the Brexit vote. Crowdfunding platform Syndicate Room also told BI that investment on its platform increased by 51% in July compared with June.
Fintech has been one of the fastest-growing and most invested in parts of the UK economy in the wake of the financial crisis, with former Prime Minister David Cameron declaring last year: "This government wants the UK to be the leading FinTech centre in the world."
However, the Brexit vote led to fears about London's future as a financial hub and subsequently fears that investment in fintech would dry up, stifling growth. Lawrence Wintermeyer, CEO of fintech trade body Innovate Finance, told BI shortly after the vote: "Uncertainty always affects investment. We’re trying to work out what the best lead indicators are — the first new term sheet in the market is a good one."
Here's the breakdown of the post-Brexit investments, ranked by size:
Crowdcube — at least £7.75 million: The crowdfunding platform is in the middle of a crowdfunding campaign on its own platform and so far has £6.75 million pledged on the site. That's in addition to £1 million invested by existing backer Balderton Capital, a London-based venture capital fund.
Revolut — £7.75 million: International money card Revolut bagged £6.75 million on July 11 from London VC firms Index Ventures and Balderton, before raising a further £1 million in an oversubscribed crowdfunding last week.
MarketInvoice — £7.2 million: Peer-to-peer invoice factoring platform MarketInvoice raised £7.2 million on July 18 from Poland's MCI Capital Group and existing investor Northzone, a Swedish VC firm.
WeSwap — £6.5 million: The international money card company raised the sum from boutique investment firm Ascot Capital Partners, EC1 Capital, and IW Capital. It was announced on July 11, the same day as Revolut's round.
Smart Pensions — at least £3 million: The pensions startup this week raised an undisclosed funding round from European asset manager Legal & General Investment Management that was reported by Tech City News to be "more than £3 million."
Lending Works — £3 million: The peer-to-peer consumer loans platform raised £3 million from Newcastle-based investor NVM Private Equity, in a round announced on July 7.
TransferGo — £2.5 million: The international money transfer service announced its Series A funding round on June 27. The investment came from Stockholm-listed investment company Vostok Emerging Finance, Tech City News reports.
Tide — £1.5 million: The app-only small business bank announced an unusually large seed funding round from a who's who of London investors on July 25.
Moneybox — £1.4 million: The savings app, which is not live yet, rounds up spare change from card purchases and invests it according to a user's risk preference. It raised £1.4 million on July 11, on top of the £2 million it raised in January, according to Tech City News.
Total: £40.6 million.
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