LONDON fintech firms have received record attention from venture capital investors so far this year, bringing in $5.3 billion in investments. Data from Dealroom and the City of London’s promotional agency London & Partners showed that the City fintech sector’s total venture capital intake so far this year is higher than for all previous full years since it started collecting figures.
The previous record was set in 2018, when fintech firms brought in $4.8 billion across the whole year. Investment in the UK’s capital accounted for more than a third of all European fintech funding, with London ranking as the top European city for fintech investment, beating New York to come second globally behind San Francisco’s $7.2 billion.
Mega funding rounds – those that raise more than $100 million – jumped in 2021, with standouts including $478 million for SaltPay, $450 million for Checkout.com and $322 million for Starling Bank.
Anne Boden, Starling Bank’s founder and chief executive, said the figures represent “a vote of confidence for the UK fintech sector”. She added: “London is a unique place for fintech companies.”
The data comes as London celebrated its first major listing of a fintech company, with money transfer business Wise floating its shares on the City bourse recently. Wise attracted a valuation of around £8 billon – much higher than its private valuation of $5 billion last summer.
Investors have bounced back following the slump at the outset of the coronavirus pandemic, as venture capital firms are eager to capitalise on the accelerated adoption of fintech products by consumers and banks.
Global investment in fintech reached $54.1 billion between January and June, the research published last month showed, narrowly surpassing the previous $54 billion record set during the entirety of 2018.
Eileen Burbidge, partner at Passion Capital and special fintech envoy for the Treasury, said: “These new investment figures show that that London’s fintech is as strong as ever.” She added: “A record first half of the year for European fintech also indicates investors are increasingly looking at what is going on across the pond from the traditional tech hubs in Silicon Valley.”
Later-stages businesses continued to take the lion’s share of deals, accounting for almost two-thirds of London’s $5.3 billion total. London is now home to 29 fintech unicorns – start-ups with a private valuation in excess of $1 billion – and is second only to San Francisco’s 37.
On a separate issue – it is interesting to note that Revolut, the digital bank, has launched a tool that will allow workers to get paid a portion of their salary as they earn it, rather than waiting until the end of the month.
Companies can connect their payroll system to Revolut to allow staff who bank with the firm to draw down a percentage of their salary early for a flat fee, as well as see how much they’ve earned so far that month.
An interface in the Revolut app will enable users to choose how much they want to withdraw from their earned salary and deposit the funds into their Revolut account. The tool will not affect their credit scores.
Chief and co-founder Nik Storonsky, said: “We believe in the importance of making financial well-being accessible to all, and this includes focusing on the impact of financial stability on employees’ mental health.”
He added: “After the difficulties of the past year, the last thing employees need now is financial uncertainties and stress. It is important to move away from a situation where many are dependent on payday loans and expensive short-term credit, a reliance that is exacerbated by the monthly pay cycle.”
Revolut’s Payday feature will be available to UK businesses before a wider roll-out to the EU and America.
(The writer is our foreign correspondent based in the UK)
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