Fintech Investment in the UK Dropped Significantly in the Third Quarter of 2022

The UK fintech industry has been one of the most vibrant and fastest-growing in the world in the last few years, but there are signs of the new investment levels dropping, so what has happened and what does this mean for the future?

fintech

The Latest Numbers

Research carried out by Beauhurst and Deloitte has revealed that the amount of equity investment in the UK’s fintech companies dropped dramatically in the last quarter. From £2.13bn in the second quarter of this year, it fell to just £491m in the third quarter.

Unsurprisingly, the number of individual investment deals carried out in that time also dropped. The main reason given for this is the difficult economic situation as the year progresses, with some new entrants into the industry having to stop their activities before they even get fully started.

This has led to fears that the industry could suffer a tough period over the next few quarters until the economic situation improves and more money flows in. Part of the problem is that the valuations of new businesses have largely fallen, and this has been an issue around the planet rather than just in the UK.

For example, Swedish startup Klarna had to cut its valuation almost in half to raise more new capital in June this year. Less well-established companies have found it even more difficult and some have had to put their funding plans on hold until the situation improves.

Arguably, the spectacular results posted by this industry in 2021 have acted to make this year’s funding figures appear less impressive. $27.8bn was poured into UK fintechs in the first half of last year, but in 2022 this had fallen to $9.6bn, according to a study by KPMG.

The Best Ideas Will Continue to Attract Fresh Money

While the numbers are disappointing, it’s clear that the best new fintech ideas will continue to attract the investment that they need. When we look at some of the most interesting startups in this sector in recent times, it’s clear that they have appealed to investors through different economic situations.

For example, eToro had 16 successful funding rounds, bringing in a total of over $320 million. An eToro review confirmed that they have more than 20 million users and one of the biggest social trading communities on the internet. It’s an Israeli fintech that was created in 2007 and offers the likes of 0% fees on stock trading and the option of social trading.

This look at the best fintech startups in London contains companies such as Soldo and Transferwise. Soldo provides a prepaid business card for expenses and by 2019 had raised $82 million in funding. As for Transferwise, they provide a way of sending money abroad at a low cost, and they had ten funding rounds to reach the title of Europe’s most valuable fintech.

The current economic struggles are making it more difficult for fintechs to raise funds, but we can expect to see those with the best ideas and strongest business models find a way to move forward with their plans anyway.