Investment in fintech sector increases against backdrop of uncertainty
According to our research into UK private companies raising between £1 million and £20 million each of growth equity capital, 161 British businesses raised £779 million of growth capital in the second quarter of 2020. The Q2 figures for the overall growth capital market illustrated a 10% – 15% quarter-on-quarter decline in the number of deals completing and the amount of growth capital being raised. This is not surprising, given that the UK was in lockdown because of Coronavirus for most of this period.
The fintech sector has performed significantly better than the wider growth capital market in Q2 2020 and has actually seen quarter-on-quarter growth. In Q2, 34 fintech deals completed, raising an aggregate £228 million, compared with 30 deals and £146 million in Q1. Fintech deals make up 21% of all growth capital deals completed and account for 29% of funds raised. This demonstrates that the tech behind Britain’s financial services industries is becoming even more popular with growth capital investors. One reason for the increase in interest is that, for many banks and other businesses, fintech is proving to be a solution to the challenges brought by the Coronavirus crisis.