Nov 23, 2023

Growth Business Where to find fintech investment Not black and white: Investment in UK fintech is down but London is still the world's hub 23 Nov 2023 Despite investment in the first half of 2023 dropping to £4.6bn UK fintechs are still attracting more VC investment than all other EMEA fintechs combined The UK is a global leader in fintech. Other than the US and India, there is no other country attracting the numbers of VC investment in the sector. London is the world’s fintech epicentre, with £7.8 billion thrown at its start-ups last year – more than San Fransico and New York. Two-thirds of the UK’s fintech start-ups are in in the city, and in 2020, the capital attracted 94 per cent of the country’s total fintech venture capital. Despite investment in the first half of 2023 dropping to £4.6bn from 2022’s £10.8bn as a result of rising interest rates, high inflation, a decrease in valuations and geopolitical tensions globally, UK fintechs are still attracting more VC investment than all other EMEA fintechs combined, with a significant percentage coming from US investors. There are other reasons for fintechs to be hopeful, too. In March this year, the UK government launched the Centre for Finance, Innovation and Technology – a quango which aims to solidify the UK’s stance as a global centre in the sector. The UK’s fintechs cover a range of specialisms, from wealth tech and regtech to insurtech and banking. The most common fintech in the UK specialises in wealthtech. It is worth noting many fintechs cross two or more of the below categories. Fintech category Where to find fintech investment Here is a list of VCs currently investing in fintech and what they’re looking for. Augmentum Europe’s leading publicly listed fintech fund, investing in fast growing businesses that are disrupting the financial services sector. Augmentum launched on the main market of the London Stock Exchange in 2018, giving businesses access to patient capital and support, unrestricted by conventional fund timelines and giving public markets investors access to a largely privately held investment sector during its main period of growth. Beringea is a transatlantic venture capital firm with more than $800m under management across its funds in the UK and the US. Its UK funds primarily invest at Series A through to Series C, and typically lead rounds with cheques between £2m and £10m. Beringea have substantial expertise in SaaS and consumer, and with three decades of experience are able to provide hands-on support to rapidly growing companies. Entrée Capital invests predominantly in software, with a current focus in enterprise, SaaS, marketplaces, big data and fintech. The fund will not invest in hardware, medical devices or consumer social networks. Entrée Capital provides multi-stage funding for innovative seed, early and growth companies all over the world. Finch Capital is an early-stage venture capital firm focusing on Europe and South East Asia. They are thematic investors in fintech (financial services, real estate, insurance) and deep tech (AI enabled transformation, security, IoT), across B2C, B2B and B2B2C businesses. They invest in verticals that include marketplaces (e.g. deposits, lending, tax, auto, legal), security (e.g. fraud, network, firewall), online distribution models (e.g. mortgages, insurance) software (e.g. AI-focused SaaS, data management, payments) and IoT (application layer). The fund does state that it will invest €0.25m to €15m over a company’s lifetime. Businesses must demonstrate the following: a capable management team, strong presence in large markets, rapid growth potential, disruptive products or services and defensible growth margins with recurring revenues. The fund favours the TMT, financial services, energy and business services sectors. FPE Capital is a growth equity investor in the UK lower middle-market. It backs businesses which have proven their business model is profitable and cash generative and is derived from a high proportion of recurring or repeatable revenue Half of investments are at idea stage and the other half are at seed stage. The founders Frog back at idea stage come and work in their office making use of their team of product people, designers, developers, marketers and recruiters to get their businesses started fast. A boutique venture firm supporting unique, innovative companies. Early stage investor based out of Antwerp, London, and Turkey. As well as providing growth capital, the fund gives businesses access to advice and strategic and operational support. The fund looks for: differentiated products that address a critical need, a strong position against current and potential market competitors, international with a high-growth market opportunity and a highly experienced and driven management. Hummingbird Ventures is a venture capital partner for extraordinary entrepreneurs building fast-growth tech companies. Hummingbird Ventures teamed up with transformative companies, including Deliveroo, Showpad, Kraken, Peak Games, Clear2pay, Amplidata, Gram Games, Shutl and many others. With a presence in London, Ghent and Istanbul, Hummingbird provides swift access to the operational resources and advice needed to build the tech companies of tomorrow. The fund specialises in IT and online services sectors, with particular focus in the following areas: digital media, social media, e-commerce, cloud computing, infrastructure software, enterprise software, gaming and mobile applications The first software powered VC firm focused on European early-stage start-ups. InReach Ventures is scaling early stage investment across Europe through software. The mission of InReach Ventures is to create and use proprietary software to scale early stage investment across Europe and develop a new model of investing that ensures full alignment between investors and entrepreneurs. Mosaic Ventures is a Silicon Valley-style venture capital firm based in London, focused on Series A. Its $150m fund invests in founding teams reshaping big markets. Their partners have over 30 years’ experience investing on both sides of the Atlantic. In that time, they have invested across 12 countries in over 70 companies that together have created over $400bn of value. Current focuses are: machine intelligence, future of money, edge computing applications, work OS and open bazaars. North East Technology Fund invests in technology businesses that are based in, or are willing to relocate to, North East England. Can provide a mixture of equity and mezzanine debt to businesses mostly at the Series A stage. Managed by IP Group and North East Finance. Outward VC is a fintech-focused VC fund addressing a clear value gap at post-seed to Series A. They look to lead or co-lead the round, with a board seat (observer at a minimum), searching for companies with a market size of at least £1bn, a clear exit opportunity, evidence of product market fit, have the core management team in place, and a sensible or proven customer acquisition strategy Established in 1999, Oxford Capital is an alternative investment manager that has pioneered the EIS fund structure and is passionate about investing in early-stage technology companies. For over 20 years, they have offered private investors and their advisers access to some of the most impactful technology companies in sectors which the UK is considered a world leader like fintech, digital health, robotics and e-commerce. Born in San Francisco and Paris, Partech is one of the most active tech investors in the world, bringing together capital, operational experience, and strategic support for entrepreneurs at seed, venture and growth stages. The current portfolio is made up of over 200 companies in more than 30 countries, of which 16 are valued at more than $1bn, including Alan, Jellysmack, ManoMano, Merama, People.ai, Rohlik, SellerX, Sorare, Toss, Wave, Xendit and Zepz. Praetura Ventures support entrepreneurs with a ‘more than money’ approach. It actively supports the founders of the companies they invest in, using experience, network and resources to help them grow and succeed. Since 2021, Praetura has appointed industry heavyweights from Apple, Social Chain, Dr Martens, Co-Op Bank and a number of exited founders to help mentor and support founders to help them grow the best business they can. Their team of 40 are based in Manchester and have a bias towards Northern-based tech and life sciences businesses