London Leads Growth in RegTech Investments as Sector set to Soar in 2017

London is set to lead a dramatic growth in the regulatory technology industry, according to new research from FinTech Global, a specialist data and intelligence firm. RegTech investments have more than tripled over the last five years Investments in RegTech companies have grown by a multiple of 3.5 times over five years:

• Investments in RegTech companies have grown by over 38.5% (C.A.G.R) between 2012 and 2016.
• Last year a record $678m was invested in 70 companies, compared to $185m in 32 companies in 2012.

London has established itself as the global leader in RegTech deals Figure C. RegTech Investments by City, 2012-2016 London takes the tops spot for the city with the most RegTech deals over the last five years:

• 39 investments were made in London-based RegTech companies between 2012 and 2016.
• The next four cities in the ranking are based in the US, which on a country-basis was home to over 70% of RegTech deals over the same period.
• Toronto was home to six investments.
• Tel Aviv follows in eighth place with four deals.
• Dublin and Paris are the only other European cities to appear in the top 10.

Figure D. Top RegTech Deals in London, 2016 The largest six RegTech deals in London last year raised over $65m from some of Europe’s leading venture capital firms:

• Identity verification business Onfido raised $25m Series B round led by Idinvest Partners, which was the largest deal in the sector in London last year.
• Risk analytics startup OpenGamma raised a $13.3m Series D round led by Accel Partners and ICAP
• Fraud-prevention company Featurespace raised $9m from TTV Capital.
• AML firm ComplyAdvantage was backed by Balderton Capital, which invested $8.2m.
• Elliptic raised $5m Series B round from Paladin Capital Group, Octopus Ventures, Santander InnoVentures, KRW Schindler and Digital Currency Group.
• Encompass collected $4.7m from Adcock PE and Scottish Investment Bank.

Figure E. Most active Investors in RegTech, 2012-2016 The majority of deals financed in London are early-stage:

• Three of the top 10 most active RegTech investors (in terms of numbers of deals) are based in London.
• However, these top three investors are accelerators - Techstars, Wayra and StartupBootcamp – that made small investments of average size $0.07m

Investors are particularly interested in anti-fraud companies Figure D. RegTech Investments by Sub-sector, 2014-16 Backing for anti-fraud companies has overtaken compliance-focused companies:

• Investments in companies in the anti-fraud sector have jumped from $82.2m in 2014 to $334.8m in 2016.
• As a subsector of RegTech it has increased from 14.1% of all investments to 49.4% in 2016.