Amid the global
economic slowdown and uncertainties, the FinTech sector
continues to attract significant capital, showcasing its resilience. In the
first six months of 2023, global investment in FinTech reached $27.3bn across
1,711 deals. Although the value is impressive, it represents a decrease of 14% from the second half of 2022.
The UK’s
FinTech ecosystem, despite facing challenges, such as high inflation and cash
flow constraints, demonstrates robustness with established FinTech firms
leveraging innovation to capitalize on market opportunities.
According
to a recent study by Innovative Finance, H1 2023 has underscored a
broader economic slowdown. The total capital investment of $27.3 billion across
1,714 deals marks a drop of 14% from H2 2022. Factors contributing to this
slowdown include recessionary trends in Europe, the US, and China, as well as high
inflation leading to increased central banks’ base rates.
Despite
these conditions, the average deal size in the FinTech sector has been on the
rise, standing at approximately $15.9 million in H1 2023, showcasing the
sector’s resilience and growth potential.
“The
drop in global and UK FinTech investment is an expected result of the current
economic landscape,” Janine Hirt, the CEO of Innovate Finance, stated. Hirt
added that they remain committed to supporting the FinTech ecosystem.
Different
regions are at various stages of the investment cycle. While the rest of the
world saw a fall of 38% in FinTech investment, the US experienced an increase of 23% in H1 2023 compared to H2 2022. The United States remains the leading FinTech
investment market with $15.6 billion invested in 663 deals. This was followed by the
UK with $2.9bn invested in 199 deals. For the first time, 4 of the top 10 markets
are from Asia, with China, Singapore, India, and South Korea holding prominent
positions.
In
addition, the trend suggests a shift towards investment in established FinTechs
during the market downturn. In H1 2023, later-stage VC accounted for about 70%
of the total, which is up from 54% seen in 2022.
The UK FinTech Industry Stays
Strong Despite Lower Funding
In the
first half of 2023, the total capital invested in UK FinTech amounted to $2.9
billion, spread across 199 deals. This figure reflects a decrease of 37%
compared to the second half of 2022. Out of the 199 deals, 111 occurred in Q1,
with a total investment of $2 billion. The remaining 88 deals took place in
Q2, accounting for a total investment of $864 million.
Despite a
decrease in the number of deals and the amount of capital invested, the UK
FinTech landscape in H1 2023 is still 35% higher than the first half of 2020,
pre-Covid levels. The UK remains a leading global FinTech hub , with London
accounting for 91% of all capital invested into UK FinTech so far this year.
“The VC market
is like any other market. Any other market sees growth, fallback and
consolidation. We’ve seen possibly the most challenging environment in several
decades: post-Brexit, covid interest rates, supply chain shock,” Stephen Lemon,
a Partner at Volution, commented. “The economy as a whole is taking a breather
and VC backed business, as they are naturally speculative, will contract a bit.
Is it symptomatic of a more broad problem? No, this is where innovation
happens.”
However,
female-founded or co-founded companies continue to represent a small proportion
of the UK FinTech landscape, indicating a crucial area for improvement. According
to Innovate Finance, there were only ten female-led companies that successfully
completed venture deals in the first half of 2023. These 10 deals generated a
total of $62 million, ranging from Seed Series through Series C funding rounds.
Unfortunately, female-driven FinTechs accounted for 2.2%, which is an extremely low percentage of
venture investment in the UK during this period, compared to 4.9% in the full
year of 2022.
Amid the global
economic slowdown and uncertainties, the FinTech sector
continues to attract significant capital, showcasing its resilience. In the
first six months of 2023, global investment in FinTech reached $27.3bn across
1,711 deals. Although the value is impressive, it represents a decrease of 14% from the second half of 2022.
The UK’s
FinTech ecosystem, despite facing challenges, such as high inflation and cash
flow constraints, demonstrates robustness with established FinTech firms
leveraging innovation to capitalize on market opportunities.
According
to a recent study by Innovative Finance, H1 2023 has underscored a
broader economic slowdown. The total capital investment of $27.3 billion across
1,714 deals marks a drop of 14% from H2 2022. Factors contributing to this
slowdown include recessionary trends in Europe, the US, and China, as well as high
inflation leading to increased central banks’ base rates.
Despite
these conditions, the average deal size in the FinTech sector has been on the
rise, standing at approximately $15.9 million in H1 2023, showcasing the
sector’s resilience and growth potential.
“The
drop in global and UK FinTech investment is an expected result of the current
economic landscape,” Janine Hirt, the CEO of Innovate Finance, stated. Hirt
added that they remain committed to supporting the FinTech ecosystem.
Different
regions are at various stages of the investment cycle. While the rest of the
world saw a fall of 38% in FinTech investment, the US experienced an increase of 23% in H1 2023 compared to H2 2022. The United States remains the leading FinTech
investment market with $15.6 billion invested in 663 deals. This was followed by the
UK with $2.9bn invested in 199 deals. For the first time, 4 of the top 10 markets
are from Asia, with China, Singapore, India, and South Korea holding prominent
positions.
In
addition, the trend suggests a shift towards investment in established FinTechs
during the market downturn. In H1 2023, later-stage VC accounted for about 70%
of the total, which is up from 54% seen in 2022.
The UK FinTech Industry Stays
Strong Despite Lower Funding
In the
first half of 2023, the total capital invested in UK FinTech amounted to $2.9
billion, spread across 199 deals. This figure reflects a decrease of 37%
compared to the second half of 2022. Out of the 199 deals, 111 occurred in Q1,
with a total investment of $2 billion. The remaining 88 deals took place in
Q2, accounting for a total investment of $864 million.
Despite a
decrease in the number of deals and the amount of capital invested, the UK
FinTech landscape in H1 2023 is still 35% higher than the first half of 2020,
pre-Covid levels. The UK remains a leading global FinTech hub , with London
accounting for 91% of all capital invested into UK FinTech so far this year.
“The VC market
is like any other market. Any other market sees growth, fallback and
consolidation. We’ve seen possibly the most challenging environment in several
decades: post-Brexit, covid interest rates, supply chain shock,” Stephen Lemon,
a Partner at Volution, commented. “The economy as a whole is taking a breather
and VC backed business, as they are naturally speculative, will contract a bit.
Is it symptomatic of a more broad problem? No, this is where innovation
happens.”
However,
female-founded or co-founded companies continue to represent a small proportion
of the UK FinTech landscape, indicating a crucial area for improvement. According
to Innovate Finance, there were only ten female-led companies that successfully
completed venture deals in the first half of 2023. These 10 deals generated a
total of $62 million, ranging from Seed Series through Series C funding rounds.
Unfortunately, female-driven FinTechs accounted for 2.2%, which is an extremely low percentage of
venture investment in the UK during this period, compared to 4.9% in the full
year of 2022.
- SEO Powered Content & PR Distribution. Get Amplified Today.
- PlatoData.Network Vertical Generative Ai. Empower Yourself. Access Here.
- PlatoAiStream. Web3 Intelligence. Knowledge Amplified. Access Here.
- PlatoESG. Automotive / EVs, Carbon, CleanTech, Energy, Environment, Solar, Waste Management. Access Here.
- BlockOffsets. Modernizing Environmental Offset Ownership. Access Here.
- Source: https://www.financemagnates.com//fintech/fintech-funding-drops-from-pandemic-highs-to-273-billion/
