UK is top investment destination in Europe for FinTech sector

Innovate Finance

The UK FinTech sector has retained its role as the top-ranking investment destination in Europe, with $4.1 billion venture capital and growth private equity invested across a total of 408 deals. While this represents a year-on-year drop of nine per cent, given the global Covid-19 pandemic and the surrounding economic challenges, it’s not surprising it wasn’t more.

Globally, the UK ranks second only to the US in total capital raised.

Overall, global FinTech investment for 2020 reached $44 billion across 3,052 deals. Total investment increased by 14 per cent from 2019, highlighting another strong year for the sector worldwide. The US attracted investment of $22 billion, up 29 per cent while Indonesia ranked third with $3.3 billion and India fourth with $2.6 billion.

The UK dominated European FinTech investment, accounting for just under half of the total $9.3 billion, and with more deals and capital invested than Germany, Sweden, France, Switzerland and the Netherlands combined.

Within Europe, Germany was second with $1.4 billion of investment across 71 deals, up 50 per cent. Sweden ranked third with $1.3bn of capital raised, with France ($522m) and Switzerland ($294m) closing out the top five.

The largest investments in Europe were secured by payments company Klarna in Sweden ($650m), and challenger banks Revolut in the UK ($580m) and N26 in Germany ($570m).

London-based firms attracted 91% of capital invested in UK FinTech.

Investment backing for female founders in UK FinTech grew to $720m in 2020, accounting for 17 per cent of total investment, rather pathetic, but still an increase from a paltry 11 per cent of the total in 2019.

Charlotte Crosswell, CEO of Innovate Finance, said: “Given the tough and turbulent year we’ve experienced, it’s very encouraging to see strength and resilience in the global FinTech sector’s ability to raise capital. Now more than ever, we should celebrate the strong position the UK has carved out at an international level. We are a world-leading FinTech hub, and as the figures reveal, the epicentre of FinTech in Europe – despite the many challenges thrown our way.

“The pandemic has created new barriers for many companies seeking funding, so it is all the more vital that we support our innovative companies to fuel their future success and growth.”