London is fast becoming the global capital for fintech, as the sector grows the UK Trade & Investment estimate that the total amount invested in fintech companies last year in the UK was more than £342 million.
Dan Ridsdale, technology analyst at Edison Investment Research suggests that the reason is simply for the growth we are seeing, as he suggests “The close proximity of the London cluster of fintech companies with the investment community naturally creates a strong gravitational pull for investment” he says. “For some, the regulatory environment is also more attractive than the United States, for example, where regulation changes from state to state.”
Charlotte Walker-Osborn, partner and head of telecommunications, media and technology (TMT) at law firm Eversheds, says “Investment from the venture capital community is one of the biggest indicators that London is winning the battle for fintech supremacy globally.”
Here’s a rundown of the top 10 UK fintech startup funding rounds of 2015, according to CBR online:
1. MarketInvoice – £6m
MarketInvoice is a peer-to-peer fintech company started in London in 2011 with the aim of facilitating funding for smaller companies, one of the key markets for the start-up scene.
Only on Monday the company raised £6m from the technology investor Northzone, among others, adding to a previous round where it nabbed £5m at the end of last year.
2. eToro – £7.7m
Describing itself as a “social investment network”, eToro runs a platform allowing people to trade in currencies, commodities, indices and much else, covering 4.5 million users across 170 countries.
In the seventh funding round since the company formed in 2007 the company pulled in £7.7m from the German Commerzbank, the latest in the £47m the firm has collected in various rounds.
3. Velocity – £7.7m
Velocity is the creator of an app designed to take away the awkwardness of splitting bills at the end of meals, as well as provide reward programs to keep punters coming back.
In June of this year the company collected £7.7m in Series A funding, with investors including former Thomson Reuters chief executive Tom Glocer as well as Initial Capital Partners.
4. Currency Cloud – £11.5m
As implied by its name, Currency Cloud is an international money transfer service that runs an engine and APIs [application programming interfaces] which developers can use to loop themselves into the firm’s payment network.
In a Series C funding in June the company raised £11.5m, taking total funding to £23m after just three years in business.
5. Azimo – £12.8m
Another money transfer service, Azimo managed to achieve a valuation of just shy of £64m after its latest funding round which bagged it £12.8m.
According to chief executive Michael Kent, the money has been marked for expansion into Europe, with the firm making special effort to reach out to migrants whom it claims are often neglected by conventional finance.
6. RateSetter – £20m
RateSetter is a peer-to-peer lending platform that helps connect people who want to borrow money with those willing to lend it.
Back in March the company was able to secure almost £20m in investment from the investment banker Ken Costa, Woodford Investment Management and investment managers Artemis. RateSetter said it would spend the money on technology and marketing.
7. LendInvest – £21.8m
Another peer-to-peer marketplace, LendInvest distinguishes itself from similar platforms by handling mortgages rather than other types of loan, allowing customers to borrow up to £5m.
Though based in London, the company managed to secure backing from Beijing Kunlun, a Chinese tech firm that agreed to invest agreed to invest £21.8m in the company.
8. TransferWise – £37.2m
TransferWise is one of the larger money transfer services in the British start-up scene, operating a peer-to-peer platform that now shifts £500m overseas a month.
Near the start of the year the company was able to bag £37.2m in investment from noted California venture capitalists Andreessen Horowitz, the British entrepreneur Richard Branson and PayPal founder Peter Thiel.
9. World Remit – £64m
WorldRemit is another company in the money transfer game, competing in the global remittance market that covers small fees often transferred between migrants and their families back home.
In February of this year the company was able to obtain £64m in global funding, leaving it valued at £320m, half the amount needed to place itself among European increasingly common tech “unicorns” worth $1bn.
10. Funding Circle – £96m
Perhaps the largest peer-to-peer lender in London is Funding Circle a technology start-up that began life five years ago and since claims to have handled £771m in loans.
In what was seen as one of the strongest signs the British capital is making ground on Silicon Valley’s investment seen, Funding Circle managed to raise £96m in April of this year, with Russia’s DST Global leading the round.
Fintech Trends & Future:
Earlier in the year CB Insights and accenture published “The Future of Fintech and Banking” report, which outlined the fintech investment trends from the past few years.
According to the report, fintech investment globally jumped 201% between 2013 and 2014, smashing the $12B mark over more than 730 deals. The US still makes up the majority share, however Europe experienced the highest level of growth, with an increase of 215% (year-on-year). 2015 has looked promising for the UK, as London is see as the fintech capital across the global.
Figure 5: Top 5 European Regions for Fintech Investment
- UK and Ireland dominated Europe’s fintech investment last year and still remain there in 2015.
- The rest of Europe is showing promise: the most significant levels of investments were in the Nordic countries ($345 million), the Netherlands ($306 million) and Germany ($82 million).
Figure 6: Five-Year Growth in Fintech Investment ($M)
Fintech investment growth:
- UK and Ireland (42% of European investment) was slightly slower (up 136% to $623 million)
- Silicon Valley more than doubled fintech investment in 2014 (117%), following a relatively slow 2013. This doubled investment pushed the start-up hotspot over the $2 billion mark, more than the total investment in Europe ($1.48 billion).
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