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Late-stage UK fintech funding hit hardest by downturn

Fintech funding UK
Image credit: Marian Weyo via Shutterstock

The UK fintech space has not been immune to the wider tech downturn. New data shows that funding for British fintech startups dropped by around 13% last year, with late-stage funding seeing the largest decline.

According to market insight platform Tracxn, tech startups operating in the financial sector raised a total of $11.2bn (£9bn) in 2022, down from $12.9bn (£10.4bn) the year prior.

Late-stage funding for UK fintech startups has been hit the most in the past year, dropping by 26%, while early-stage funding actually increased by 34% compared to 2021.

The report also found that the number of UK-based entrants to the tech unicorn club – a private company with a valuation of $1bn or more – dropped by more than half, from 14 companies in 2021 down to six.

It was also a quiet year for fintech IPOs, with the only public launch from the sector coming from insurtech startup Ondo, which listed on the London Stock Exchange through a SPAC deal.

That’s compared to eight fintech IPOs in 2021, including the international remittance company Wise.

Despite the downturn for UK fintech 2021, the country’s sector managed to stand above the rest, retaining its European crown for total investments over the year, according to Innovate Finance.

The UK’s fintech sector was ranked second globally behind the US for total investments over the year.