UK loses ground in FinTech investment
The report – using data provided by Pitchbook – found that total UK FinTech funding in the sector roughly halved between Q2 and Q3’17 with total investment falling to $636m from over $1.2bn.
However year-on-year the picture is more positive as the unease around Brexit appears to have softened, with Q3’16 seeing just $120m invested.
Looking at the spread of activity between countries and their capital cities, Paris and London respectively were host to 90 per cent of the deal value in those countries.
Germany accounted for the largest share of FinTech investment in Europe this quarter buoyed by the $806 million secondary buyout of ConCardis.
The UK, meanwhile, accounted for seven of Europe’s largest deals, including $100 million+ rounds to Prodigy Finance and Neyber.
Richard Gabbertas, head of financial services regions at KPMG UK, said: “London is the finance centre of the UK and has been for a long time so it’s only natural that it will attract a disproportionate amount of FinTech activity but I hope to see that change in time as other centres catch up.
“Edinburgh, Manchester and other regional cities are making huge strides in developing promising FinTech centres, diversifying and boosting the local job market.
“I hope that in the next few years we start to see more support from government, corporates and investors for our budding regional FinTech hubs.”
Globally, the US led FinTech investment in Q3’17, with US$5 billion deployed across 142 deals.
Europe and Asia lagged considerably behind, with Europe deals accounting for $1.66 billion of investment across 73 deals, and Asia accounting for $1.21 billion across 41 deals.
Despite healthy investment activity, the volume of VC FinTech deals dropped dramatically in Q3’17, particularly at the earlier deal stage.
The number of angel and seed stage FinTech deals plummeted to 67 for the quarter, a low not seen since Q1’13.
This reflects the trend of investors focusing on larger deals and higher quality companies with proven business models.
“The FinTech market continues to rapidly evolve with an increasing diversity of funding participation and sources, geographic spread and areas of interest,” said Murray Raisbeck, global co-lead at KPMG FinTech.
“We are seeing the emergence of FinTech leaders who are looking to expand internationally to scale their platforms, as well as large technology giants moving into adjacencies to create new value for their customers.
“This is a trend that is expected to continue and could force incumbent financial institutions to take bolder steps in response.”