UK helps drive global VC fintech investment to a record high
INVESTMENT in fintech ventures reached another all-time high in 2017, buoyed by a surge in funding for start-ups in the UK, US and India, research reveals.
The analysis by professional services company Accenture found global fintech financing rose 18 per cent in 2017 to US$27.4bn (£19.7bn).
Deal values almost quadrupled in the UK to an all-time high of $3.4bn, led by a $900m fundraise by digital insurance distributor BGL Group.
Payments firm TransferWise completed the second-largest fundraising in the UK, raising $280m.
Julian Skan, senior managing director in Accenture’s financial services practice, said much of the growth in the UK and US has been driven by big new investment flows from China, Russia, the Middle East and other emerging economies.
“In addition, we saw more and more business-to-business fintech models proving out at the banks, coupled with larger and later-stage investments as the fintech world scales up. Also fuelling growth was the rapid rise of ‘insurtech’ ventures where traditional carriers see new opportunities,” he added.
Read more: Fintech firms growing twice as fast as other start-ups
The total number of global fintech deals rose sharply, from just over 1,800 in 2016 to nearly 2,700 in 2017.
Start-ups developing payments and lending took the bulk of funds in 2017, accounting for about 30 per cent each of the total, while those offering insurance-related services garnered 12 per cent of funds.
Between 2010 and 2017, global investment reached $97.7bn, with US start-ups accounting for more than half (54 per cent) of all investments, according to the analysis of investment data from CB Insights.
Read more: BNP Paribas launches fund to support fintech start-ups
The volume of fintech deals grew at a compound annual rate of 35 per cent, with total funding growing at a compound annual rate of 47 per cent.
“This volume of investment reflects the soaring demand within financial services for new digital innovations, as these technologies prove their value and applicability in the market,” said Richard Lumb, group chief executive – financial services at Accenture.
He added: “For markets like the UK, where slower economic growth and industry uncertainties due to Brexit have been an issue, it is an encouraging sign.”
Meanwhile, mega fintech deals that had catapulted China to the top destination in the world for venture capital money in 2016 fell last year, as investors pulled back after pouring billions of dollars into giant-sized transactions.
Fintech funding in China declined 72 per cent to $2.8bn, from a record $10bn in 2016.
Read more: FCA considers launch of global fintech sandbox
