Fintech investment builds on momentum and is set for record year
Fintech is continuing to enjoy popularity with investors who see it as a sector with excellent prospects for sustainable growth. The sector’s rise last year against a backdrop of great uncertainty has continued in 2021, with strong investment volumes gaining momentum.
Fintech investment activity has in fact picked up pace in 2021, with 125 deals worth £622 million transacted in H1. This volume is up a staggering 79% on H2 2020’s 70 deals worth £386 million, and up from 64 deals worth £374 million over the corresponding period a year ago.
Average fintech deal size
The first half of 2021 saw substantial growth in deal activity in Fintech sectors, with angel, seed and early-stage investments all doubling semester-on-semester. And with these investors typically investing smaller amounts, it may be that the volume of investments is behind the reduction from £5.5 million in H2 2020 to £5 million in H1 2021.
Fintech deals were, on average, larger than investments in the wider growth capital market, which saw a steady decline across five quarters, before increasing in Q1 2021. As well as this, an increasing number of deals worth over £100 million are being recorded due to an influx of investors into the Fintech sector.
Notable fintech deals
The standout deal of 2021 involved a US giant buying a Swedish scale-up — a stark reminder of the global nature of fintech. After an anti-trust ruling prevented Visa from buying the US-based Plaid, it announced its acquisition of open-banking tech specialist, Tink, whose single API allows customers to connect to bank accounts from their own apps and services.
Tink had already been backed by VCs, including Dawn Capital, which had also backed iZettle — which was itself acquired by PayPal in 2018.
Green money in Fintech
With around £96 billion of rent flowing through the UK each year, it’s clear that lettings are big business. However, this process of getting the keys is often time-consuming and inefficient.
Goodlord is helping make it a bit easier for everyone involved, handling contracts, referencing, insurance, tenant services and more in one fully-integrated system. The efficiencies it brings has seen it capture around 10% of agents since launching in the market in 2014.
“Our growth has skyrocketed in the last two years because remote working has meant everyone needs a digital-first approach to things,” says Tom Mundy, co-founder and COO of Goodlord. This is just one example of how automation has become a must-have for firms in a variety of industries.
And this hasn’t gone unnoticed by investors, with increasing sums of growth equity being invested into fintech businesses showing promise.
Females in Fintech
According to John Watkins, Managing Partner at Altima, just 14% of CFOs in early-stage (up to $25 million) tech-enabled businesses in Europe are female.
“In an industry where women are significantly outnumbered, if you hire exclusively on experience, you’ll usually end up with a white male. People deem it brave if you don’t hire based on direct experience, but the truth is that bringing cognitive diversity into a leadership team produces stronger commercial results,” John points out. “There is more of a focus on diversity and it makes business sense to embrace that.”
Because of this, VCs are increasingly asking for diverse shortlists. “We’re happy to do that but you have to remember that, even with a balanced shortlist, if you focus on previous experience, you’ll still probably end up with a white male. We’ve run searches for a number of high-profile VCs where the candidates were entirely diverse in terms of gender, experience, background and potential. Having a diverse pool effectively redresses the existing imbalances inherent in this role.”
Read more in our report on Fintech investment here.