London fintech firms have received record attention from venture capital investors so far this year, attracting $5.3bn in investment in the first six months of 2021.
Data from Dealroom and the City of London’s promotional agency London & Partners showed the City fintech sector’s total venture capital intake so far in 2021 is higher than any other full year since it started collecting figures, despite being just six months in.
The previous record was set in 2018, when fintech firms brought in $4.8bn across the whole year.
Investment in the English capital accounted for over a third of all European fintech funding, with London ranking as the top European city for fintech investment, beating New York to come second globally behind San Francisco’s $7.2bn.
Mega funding rounds, meaning those which raise more than $100m, jumped in 2021, with standouts including $478m for SaltPay, $450m for Checkout.com and £322m for Starling Bank.
Starling Bank founder and chief executive Anne Boden said the figures represent “a vote of confidence for the UK fintech sector”. “London is a unique place for fintech companies,” Boden added.
The data comes as London celebrated its first major listing of a fintech company earlier this week, as money transfer business Wise floated its shares on the City bourse.
Wise attracted a valuation of around £8bn, much higher than it was last privately valued at $5bn in the summer of 2020. Its success followed a mixed reception for technology firms on the London Stock Exchange, including the flotations of Darktrace and Deliveroo. Investors have bounced back following the slump spotted at the outset of the coronavirus pandemic, as venture capital firms are eager to capitalise on accelerated adoption of fintech products by consumers and banks.
Global investment in fintech reached $54.1bn between January and June, the research published on 8 July showed, narrowly surpassing the previous $54bn record set during the entirety of 2018.
“These new investment figures show that London’s fintech sector is as strong as ever,” said Eileen Burbidge, partner at Passion Capital and special fintech envoy for the Treasury.
“A record first half of the year for European fintech also indicates investors are increasingly looking at what is going on across the pond from the traditional tech hubs in Silicon Valley.”
Later-stage businesses continued to take the lion’s share of deals, accounting for almost two-thirds of London’s $5.3bn total.
London is now home to 29 fintech unicorns – startups with a private valuation in excess of $1bn – and is second only to San Francisco’s 37, with new entrants this year including insurance technology companies Bought By Many, Tractable and Zego.
Firms in London also led on European investment into sub-sectors such as cryptocurrency and decentralised finance, which received $2bn in funding so far this year.