While the industry’s applications – from mobile-only banks to digital money transfer services – may not be as buzzy as the social apps and commercial products favoured in the U.S. startup market, venture capitalists (VCs) poured a record-breaking £1.34bn into UK fintech firms in 2017.
And, according to data gathered by London & Partners, UK-based financial technology startups are the top area for venture capital (VC) investment in Europe.
Despite insecurity about the impact of Brexit on UK tech, London-based fintech firms led the way, accounting for more than 90% of all money raised by UK fintech last year.
Peer-to-peer money transfer service TransferWise (£211m), peer-to-peer lending marketplace Funding Circle (£81.9m) and mobile-only bank Monzo (£71m) were among the London-based companies that saw major funding rounds. (See our list of 10 London fintech startups to watch, here).
Artificial Intelligence (AI) companies also saw elevated levels of funding in 2017.
Babylon Health (£47.56m), Callsign (£26.92m) and Starship Technologies (£13.95m) saw investment in London AI companies reach over £200m – increasing over 50% on 2016 funding levels. This trend was replicated nationally, with UK AI companies raising a record £488m last year and double the amount raised (£232m) in 2016.
“It’s a testament to our exceptional entrepreneurs that the UK tech sector continues to produce companies that are leading in the development of cutting edge technologies such as artificial intelligence and fintech,” said Eileen Burbidge, partner at VC firm Passion Capital. “This environment and ecosystem of innovation presents tremendous opportunities for investors and will help to attract global investment into the UK’s digital economy for many years to come.”