UK fintech funding has slumped in the first half of the year as cautious investors continue to navigate high interest rates and a fall in economic activity.
Newly published figures from Innovate Finance, the UK fintech industry body, have revealed that the sector raised $2.9bn (£2.3bn) in the first half of 2023, representing a 37% drop from the last half of 2022.
There is also a concerning sign that fintech investment will continue to slow, as the figures revealed the majority of fintech funding deals took place in the first half of the year.
Janie Hirt, chief executive of Innovate Finance, described the slump as an “expected result of the current economic landscape”.
Fintech has been one of the UK’s most successful tech sectors, having raised a record £8.56bn in 2021 in what was a blockbuster year for investment across all tech sub-sectors.
While figures have steadily dropped since that bumper year, the UK has remained a major player in the sector relative to the rest of the world.
Despite a clear drop off in investment, there have been several recent big money rounds that offer some hope for the future of the industry.
This month the challenger bank Tandem secured £20m shortly after reporting its first full year of profit. Investment platform TreasurySpring raised £23m in June and payments provider Volt raised £47m for its Series B last month.
There are also springs of hope at the exit stage of the fintech sector, with CAB Payments completing its listing on the London Stock Exchange last week.