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News / Tue 25 Jul 2017

VC investment into UK FinTech ‘fell by 40% in Q2 2017’

investors

UK FinTech companies raised significantly less from VCs in Q2 2017, when compared to the previous quarter.

According to CB Insights’ ‘The Global FinTech Report: Q2’17′, venture capital-backed deals in UK FinTech fell by 40% during the second quarter of this year.

The report says funding plummeted by 52% after a temporary surge in the first quarter of the year following Atom Bank’s and Funding Circle’s $100m deals.

The data shows that UK FinTech firms raised $164m during Q2 2017, compared to the $339m invested during the first quarter of 2017.

Despite investment slowing down somewhat during Q2 2017, funding raised from VCs during the period was still higher than that of Q2 2016 ($151m), Q3 2016 ($99m) and Q4 2016 ($129m).

German FinTech

Over in Germany, VC-backed FinTech firms raised $7m more than their UK counterparts, with investment in the space reaching a five quarter high of $177m.

According to the data, the rise in investment was largely driven by a $120m round closed by online lender Kreditech, which accounted for the majority (68%) of quarterly funding and was the biggest round raised in Europe during Q2.

Europe at a glance

UK firms Zopa and Blockchain were among the top 10 rounds raised in Europe during the quarter.

According to the report, Speedinvest (an investor in Curve, Loot and ClauseMatch) was the most active venture capital investor in European FinTech throughout the quarter and was closely followed by Seedcamp and Index Ventures.

Overall, European-based VC-backed FinTech startups raised $498m across 56 deals during Q2 2017.

This, the report adds, represents a slight decline when compared to Q1’s spike, which saw financial technology companies in the Continent raise $0.7bn.

Despite the slight decline, the data shows the numbers for Q2 were still ahead the quarterly totals seen throughout 2016.

In terms of deal size, the research highlights that the early-stage FinTech deal share in Europe dropped to a 5-quarter low in Q2 2017.

Additionally, Seed and Series A combined deal share to European FinTech firms declined to 53% during the period.

The median early-stage deal size dropped by 12% on a quarterly basis in Q2’17 ($2.2m) and tied for the 5-quarter low with Q4’16.

Finally, corporate participation in Europe VC-backed FinTech deals fell for the second consecutive quarter to 29% in Q2’17.