PitchBook data shows that fintech investment in the UK totaled $14.35 billion across 662 deals in 2021, representing an increase of roughly 250% and 12% from the previous year, respectively. Already in 2022, there has been $2.72 billion invested across 71 deals. Much of that activity is a result of broader, long-term trends that have spurred activity in the sector.
While funding has increased dramatically, much of that capital continues to come from outside the country. Most of the largest fintech deals for UK VCs in 2021 were led by overseas investors. Both challenger bank Revolut’s $800 million round and credit card firm Zopa’s $300 million round were led by SoftBank. It was US bank JP Morgan that led LendInvest’s more than $680 million pre-IPO round. Meanwhile, it was the Abu Dhabi Growth Fund alongside New York’s Coatue and Alpha Wave Ventures that backed a reported $475 million round for Monzo, another challenger bank.
In a statement, Judith Hartley, CEO of British Patient Capital, the VC arm of the government-backed British Business Bank, stated that many UK institutional investors are said to be reticent when it comes to investing in domestic startups: “By not investing in UK venture and venture growth funds, UK institutional investors are failing to capture the value being created by fast-growing businesses operating in some of the most exciting and dynamic sectors in the economy.”‘