UK fintech investment falls amid Brexit concerns
INVESTMENT into UK fintech start-ups fell by a third last year due to Brexit fears, new data has revealed.
Research by trade body Innovate Finance found that global investment in the sector was up by 10.9 per cent to $17.4bn (£14bn), but it fell by 33.7 per cent in the UK to $783m (£633m).
Lawrence Wintermeyer, chief executive of Innovative Finance, attributed the decreased investment in the UK to uncertainty over Brexit.
There was a moderate pick-up in deals in the third quarter, after cautious investors had held off in the second quarter, but this did not continue into the final three months of the year.
“China and the US dominate fintech investment with a combined $13.9bn of the total $17.4bn, 80 per cent of the global venture capital raised in 2016, and the top two ranked future foreign investment sources for the UK,” he said.
“While UK fintech venture investment is down 33.7 per cent in 2016 at $783m, largely attributed to the uncertainty of Brexit and geo political and macro-economic factors, quarter three funding rebounded.”
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The new data comes as the UK government makes efforts to address the “gap” in international investment into fintech.
Last October, the Treasury announced that it would be hosting an annual fintech conference in London to attract more global investors. The first conference will take place this April.
Wintermeyer said eight of the top 20 UK fintech deals closed after June’s EU referendum vote, totalling $368m, just under half of the total UK investment for 2016.
The top three UK deals last year were investment in challenger firm Starling Bank at $101m, alternative finance business lender iwoca at $57m and $52.2m in robo adviser Nutmeg.
Wintermeyer warned that UK fintech firms could be impacted if the government does not negotiate a satisfactory deal with the EU.
“The loss of passporting rights will hit fintech payments firms if special provisions to the single market are not negotiated upon leaving the union,” he said.
“However, maintaining and further improving access to global fintech talent has superseded passporting across the fintech community’s post-Brexit priorities. Over 30 per cent of Innovate finance fintech founders and corporate executives are non-British with many employing European staff. Attracting further investment to UK fintech remains the number one priority.”