Deal

Some $783m was invested in UK FinTech startups in 2016, representing a 33.7% decline since 2015.

That’s according to a report by Innovate Finance, “The 2016 FinTech Investment Landscape”, which identifies post-Brexit uncertainty as a key contributor to this decline.

In contrast and according to a report by Innovate Finance, 2016 saw 1,436 FinTech deals globally, attracting a total $17.4bn of VC investment. This represents an increase of 10.9% since 2015.

Lawrence Wintermeyer, CEO of Innovate Finance, commented: “The loss of passporting rights will hit FinTech payments firms if special provisions to the single market are not negotiated upon leaving the union.”

On a more positive note, however, despite the investment value decreasing, the report recognises that the number of UK FinTech deals grew in 2016, with 173 investments being made, an increase of 5.5 since last year. Additionally, nine out of 20 UK FinTech deals closed post-Brexit.

“Maintaining and further improving access to global FinTech talent has superseded passporting across the FinTech community’s post-Brexit priorities,” Wintermeyer continued. “Over 30% of Innovate Finance FinTech founders and CxOs are non-British with many employing European staff.”

He went on to say that attracting further investments in UK FinTech remains a number one priority.

Active investors

Alternative financing remained the top trend in 2016, followed by challenger banks, money transfer, wealth management and digital currencies.

While UK VC the value of investments in challenger banks and digital currencies decreased in 2016, the value of investments in alternative financing/lending grew by 5%, money transfer and FX grew 15% and the funding received by wealth management startups was up 2% since 2015.

The report also discovered 46% of UK FinTech investment came from VCs based outside of the UK in 2016, with US investors Techstars and FinTech Innovation Labs participating in the most deals – 8 each.

This was followed by: Startupbootcamp (7), Entrepreneur First (6), Passion Capital (5), Octopus Labs (5), Balderton Capital (5), Global Founders Capital (4), Seedcamp (3), Index Ventures (3) and Dawn Capital (3).

In terms of investment value, including both equity and debt funding, the top three UK deals in 2016 were those raised by Starling Bank, Iwoca and Nutmeg.

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