The pandemic saw a surge in fintech investment in 2020 and as the world returns to normal, the initial surge of momentum carrying fintech investments does not seem to be slowing down as it is set for a record year. Moore Kingston Smith has released its research on UK private companies raising between £1 million and £20 million each of growth equity capital.
To view the full report, download it here: https://mooreks.co.uk/insights/fintech-investment-builds-on-momentum-and-is-set-for-record-year/
Some of the key findings include:
- There were 125 fintech investment deals worth £622million transacted in H1’21. This volume is up a staggering 79% on H2’20’s 70 deals worth £386million, and up from 64 deals worth £374million over the corresponding period a year ago.
- In the wider growth capital market, there was also phenomenal semesterly rises of over 70% for investment activity: £1.96billion was transacted against 426 deals in H2’20, against £3.4billion across 727 deals in H1 2021.
- There was a small reduction in the average deal size in the £1-20 million bracket in H1’21, as it dropped from an average £5.5million in H2’20 to £5million (reaching lows of around £4.5million in Q2’21).
- This drop in volume could be in part to investors investing smaller amounts due to the doubling of early-stage investment rounds semester on semester.
- Early-stage investors invested £207 million across 40 deals in the first six months of this year, up from £168million into 22 deals in the second half of 2020. The figures mean early-stage investors accounted for a third (32%) of fintech investment volume, against just over a quarter (27%) in the wider growth capital market
“The heightened pace [of fintech investment] is a reflection of both enhanced investor interest as well as entrepreneurs more willing to take on financial backers to scale up their startups,” explained Tom Moore, Head of Fintech at Moore Kingston Smith. “That average deal sizes in fintech are down – like the wider growth capital market – suggests investors are writing back a larger number of businesses with smaller cheque sizes.”
Taking Goodlord as an example of the surge in popularity of green finance, Moore Kingston Smith spoke to Tom Mundy, co-founder and COO, “Our growth has skyrocketed in the last two years because remote working has meant everyone needs a digital-first approach to things… ESG didn’t feature in the due diligence of our first round in 2015, but we were asked about it last year. This is good because if investors are requesting it, firms will pay attention to it themselves.”
Investors are increasingly focusing on sustainability and applying an ESG (environmental, social and
governance) lens to all potential investments. “Businesses are now expected to have a positive impact on wider society. With consumers now seeking out these qualities when buying products, investors will want to see evidence that this is in place, and even start-ups will be expected to be compliant,” says Tom Moore.