Fintech Reaches All-Time Record Investment in Q3
Tech Nation, the UK’s leading growth platform for tech scaleups, today announces the 30 companies who have been accepted into Fintech 4.0 – the fourth iteration of Tech Nation’s sector-specific growth programme for fintech entrepreneurs to enable their startups to scale, both at home and abroad.
Companies accepted into the newest Fintech cohort are working to transform all areas of the finance sector; from insurance and investment, to blockchain and digital assets. This includes innovative companies who are helping younger generations earn, save and learn about money (MyPocketSkill), creating banking apps for cryptocurrencies (Ziglu), and making investing more accessible, appealing and values-based (Wombat Invest).
40% of the new cohort companies are based outside of London – including companies from Scotland (DirectID, Zumo and WhisperClaims), Wales (Yoello) and Northern Ireland (loyalBe). On top of this regional diversity, nearly a third (9) of the companies have female founders.
Together, the new Fintech companies have raised more funds than any cohort in previous years, with a collective total raise of £128.1mn, and over 70% are revenue-generating already. In UK fintech overall, companies have raised approximately £19bn, and are generating revenues of £7.64bn, as of October 2021.
New record heights for fintech
The high-growth companies join the programme as fintech grows significantly across the UK. The fintech sector has reached entirely new heights, already receiving more than double the amount of VC funding in 2021 so far compared to 2020 as a whole ($11.4bn in January-October 2021 vs $4.57bn in the whole of 2020), and Q3 2021 hit an all-time record for quarterly VC investment in UK fintech ($4.9bn).
Around half the investment made into UK fintech firms in 2021 ($5bn) so far has come from US investors, showing the international appeal of some of the UK’s world leading fintech firms.
With 40 of the UK’s 112 tech unicorns being fintechs – and fintech accounting for more than half (11) of the 20 UK tech companies that became unicorns in H1 of 2021 – the sector is driving the UK as a leading unicorn hub. After the UK, the next largest unicorn hub in Europe is Germany, home to 8 fintech unicorns, second is the Netherlands with 7, and third is France with 6. In terms of leading cities, London is Europe’s top fintech unicorn hub, home to 35 fintech unicorns, while Berlin is home to 6.
In 2021, the top 2 UK fintechs to receive highest funding are Cinch (at $1.2bn) and Revolut (at $800m, Series E funding). Tech Nation’s Future Fifty alumni Revolut became the UK’s most valuable fintech company this year, surpassing Natwest with a valuation of approx £33bn. Combined, UK fintech companies are valued at $340bn, up from $210bn last year, a 61% increase in value between 2020 and 2021, being led by the likes of Revolut and Wise.
Source: Dealroom, ‘fintech funding in the UK’
The aim of this year’s Fintech programme
The six-month government-backed Fintech programme was created to support fintech and insurtech companies in the UK. Companies accepted into the programme have access to networking events with key stakeholders, peer-to-peer meetups, and insights sessions delivered by established fintech entrepreneurs, investors and partners, which give cohort members the tools and knowledge they need to scale.
This year’s successful applicants will gain access to multiple insight sessions over 6 months (covering core issues, from investment to sales, partnerships and international expansion) delivered by later-stage founders, all focused on key scaling challenges, as well as regular networking opportunities (with investors, VCs, corporates and peers).
Empowering all of the scaling companies in the new Fintech cohort is at the core of Tech Nation’s mission to fuel the growth of tech scaleups who are helping us create a stronger economy, society and future.
Economic Secretary to the Treasury, John Glen, said: “It’s great to see 30 new companies joining Tech Nation’s Fintech programme. Our backing for this scheme is one part of our commitment to making the UK a great place for Fintech companies to set-up, and scale-up. With investment in UK Fintech soaring, and 40% of these new companies based outside of London, investors are clearly seeing the enormous potential in this sector across the UK.”
Katja Palovaara, Fintech Programme Lead at Tech Nation, said: “We are delighted to welcome these 30 inspiring fintech companies to the Fintech 4.0 cohort. As the UK’s flourishing fintech sector continues to drive more investment than ever before, our fintech companies are not just disrupting traditional financial sectors; they are working alongside them to ensure that everyone has the tools and knowledge they need to succeed financially. Many of these fintechs are not only focussed on helping people earn more and invest better, but on making the world a better and fairer place. We can’t wait to see what they do next.”
Dr Christopher Sier, Chair of Fintech North and Fintech 4.0 Judge, said: “The diversity of the companies that have been selected is fantastic and testimony to the vibrancy of the UK Fintech scene, both in terms of product and service, but also in terms of geography. Of the winners almost half were from outside London, confirmation of the need for a regional approach to supporting the UK Fintech sector, and validation of the key findings in the recent Kalifa Review on Fintech.”
Stephen Ingledew, Executive Chair of Fintech Scotland and Fintech 4.0 Judge, said: “Fintech innovation is making a significant contribution to the development of the digital economy across the UK and the Tech Nation Fintech Growth Programme is a valuable initiative supporting innovative enterprise, including ground breaking firms from Scotland such as DirectID, Zumo and WhisperClaims. Fintech SMEs hugely benefit from the Programme in driving accelerated growth and the opportunity to embrace the opportunities of scaling, all of which supports the further demonstration of the UKs global fintech leadership.”
Sarah Williams Gardner, CEO of Fintech Wales and Fintech 4.0 Judge, said: “I’m delighted to hear that Cardiff-based Yoello will be part of Tech Nation’s Fintech 4.0 programme. Over the past 18 months, they have adapted their business to serve the hospitality industry and a truly difficult time making a real difference. They join MyPinPad, who recently were announced as Future Fifty 10.0 cohort. These both follow in great footsteps with Delio, Credas, and Coincover who have all been on the Fintech programme, demonstrating the depth and breadth of the thriving Welsh fintech ecosystem, which was recently highlighted in the UK strategic Fintech Strategy led by Ron Kalifa – and there’s plenty more to come.”
Helene Panzarino, Associate Director at Centre for Digital Banking and Finance and Fintech 4.0 Judge, said: “It’s easy to get caught up in the fantastic funding stories that surround scaling fintechs, but to achieve genuine commercial growth and own a market takes more than funds. By supporting diverse products, services and teams in their scaling journey the economy, the industry and most importantly, customers will benefit from the Tech Nation Fintech 4.0 programme as well.”
Ezechi Britton, CTO in Residence at Impact X Capital and Fintech 4.0 Judge, said: “Having spent my career working in, building and investing in UK Fintech it’s astounding to see such a talented cohort of Fintechs hungry, ready and waiting to transform the global economy. It’s been an honour to have ringside seats as these Fintech founders continue to disrupt the incumbents whilst increasing access to financial services in ways that would have been impossible in the past. I look forward with great anticipation to what this next generation of up and coming Unicorns do next. UK Fintech is truly a world-leading industry and this cohort of 30 will be at the beating heart of it.”
Alastair Lukies CBE, Founder and CEO of Pollinate and Fintech 4.0 Judge, said: “I’m delighted and honoured to have been working with Tech Nation for the 4th year running to help select and welcome these 30 fintechs into the programme. The UK continues to lead the way for innovation in fintech, and the selection and diversity of these companies truly represents that, and is a recognition of industry growth – even throughout the global pandemic. SMEs across every industry are truly the backbone of our economy, and I’m excited to see how these companies continue to grow within Tech Nation’s programme.”
Jelena Ewart, Co-Founder at Upside Partners and Fintech 4.0 Judge, said: “The only thing more exciting than the pace of global fintech investment has been the rise in the quality of the startups we’re seeing. Specifically in the UK, it’s clear that years of compounding support and investment in the venture landscape are paying off. It truly takes a village to build a vibrant entrepreneurial ecosystem, and I’m thrilled that Tech Nation is continuing to double down on its commitment to the leaders building the digital infrastructure of the future.”
Yuelin Li, VP Strategy at Onfido and Fintech 4.0 Judge, said: “The calibre and diversity of fintechs joining TechNation’s fintech 4.0 programme is indicative of the strength and transformation of the UK’s financial sector. Over the past 18 months, digital innovation has been at the heart of keeping us all connected to essential financial services, with digital identity verification providing just one secure, seamless solution when we all needed it most. With investment in the industry continuing to reach new heights, it’s an exciting time to be involved in the ecosystem and there’s no doubt that this new cohort will accelerate our collective ambition to make the world a fairer and more accessible place.”