Global VC investment for FinTech in H1 2017 attracted $6.5 billion of VC investment with 787 deals, a 45% decrease year on year, according to statistics compiled through Pitchbook by Innovate Finance, the not-for-profit membership association for global FinTech.
- H1 2017 saw 787 deals globally, attracting $6.5 billion of VC investment, a 45% decrease year on year for the same period (YoY) – however, if you exclude the mega-deals in China in H1 2016, where three companies raised over $1 billion each, we see that global investment has gone up 28.4% (YoY)
- UK attracted $564 million of VC investment, up 37% on H1 2016 but lower than pre-Brexit H1 2015 figures
- UK ranked third globally in total investment behind the United States and China, and second in terms of deal volume with 102 deals
- Top 5 UK deals were Atom Bank, Funding Circle, Zopa, Monzo and Currency Cloud
- UK firms Atom Bank and Funding Circle made it into the global top 20 deal list
- US attracted the largest amount of VC investment at $3.3 billion over 357 deals
- US online personal finance firm SoFi raised the largest round globally at $453 million
- China, which raised the largest amount of VC investment in 2016, dropped to second place with $1.0 billion of investment compared with $7.0 billion in H1 2016, a 86% decrease YoY
- The most active global investors were 500 Startups, Startupbootcamp and Y Combinator with 17 investments each
- Alternative lending, challenger banks and wealth management top three investment verticals in the UK
While total global investment dropped, UK VC investment for FinTech firms increased by 37% to $564 million, despite Brexit and the future uncertainty between European markets and the UK’s financial services sector. Both Q1 17 and Q2 17 were higher than Q1 16 and Q2 16 by 45% and 22% respectively.
The US attracted the most investment both in deal value, which topped $3.3 billion, and deal volume, with 357 investments in total. Overall, the US experienced a 7.7% increase on H1 2016 deal value, but an 18.5% decrease in deal volume. Last year this quarter, the US secured 438 deals.
China, which raised the largest amount of VC investment in 2016, dropped to second place with $1 billion of investment compared with $7.0 billion in H1 2016, a 86% decrease YoY.
The top three global FinTech deals came from the US and China, with American firm SoFi raising the largest round globally at $453 million. Chinese companies AvidXchange and E-Life Financial came second and third, raising $300 million and $275 million respectively.
The UK attracted 102 deals this quarter, the highest volume outside the US, and remained third place behind the US and China in terms of total FinTech investment. Of the top 20 global deals, two companies were from the UK — Atom Bank, which secured $102 million in funding, and Funding Circle, which raised $101 million.
The bulk of UK VC investment in FinTech for H1 2017 was in alternative lending (28%), challenger banks (25%) and wealth management (13%). 54% of investment into the UK was from non domiciled VCs, largely coming from North America (33%).
Atom Bank ($102 million), Funding Circle ($101 million), Zopa ($41 million), Monzo ($27 million) and Currency Cloud ($25 million) led the top 5 top UK deals. Collectively the firms attracted $296 million in funding.
The following seven Innovate Finance members made the list of top 20 UK investments: Zopa ($40.9 million), Currency Cloud ($25 million), Smart Pension ($19.2 million), Ratesetter ($16.8 million), Yoyo Wallet ($15.4 million), Neyber ($9.5 million) and Habito ($6.7 million).
The world’s most active FinTech investors in H1 2017 were 500 Startups, Startupbootcamp and Y Combinator with 17 investments each. Seedcamp, Woodford Investment Management, Connect Ventures and Anthemis Group were the most active in the UK, with three investments each.
Commenting on the findings, Abdul Haseeb Basit, CFO of Innovate Finance said: “The investment data for the first half of 2017 shows that global FinTech investment is down verses the same period in 2016, however if you adjust for the exceptional mega-deals in China in H1 2016, where three companies, Alipay, Lufax.com and JD Finance, raised over $1billion each, we see that global investment has gone up 28.4%. The sector continues to thrive.”
He added: “Despite the uncertainties of Brexit, the UK retains its position as a leading FinTech hub and has attracted more investment in H1 2017 than the same period last year. These investment figures are lower than H1 2015, signalling a slow return to pre-Brexit funding levels. The UK government needs to continue its support for the sector, by ensuring the country remains attractive to talent and investment, while also maintaining an open trading relationship with Europe and the rest of the world.”
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