The UK FinTech industry received $12.5 billion in investment in 2022, marking an 8% decrease YoY, according to Innovate Finance.
Despite the decline, the UK maintained its position as the second-largest recipient of FinTech investment globally, behind the US.
The global decrease in FinTech funding reached 30% YoY.
Recent Deals
Despite the decline in funding, UK fintechs are still attracting investment. The following three companies secured financial backing in the last week of January.
- Liberis raised €30 million ($31.5 million) in debt financing to expand across Europe. The embedded finance company uses machine learning to analyze SMEs’ risk profiles and maximize funding opportunities.
- Monument Bank sold a 9% stake for an undisclosed sum to Dubai Investments. The lender focuses on mass-affluent customers and offers lending and savings services digitally.
- LendInvest received £120 million ($140.9 million) to expand in the UK mortgage market. The FinTech aims to disrupt the market by simplifying the mortgage process.
Three Takeaways
Fintechs in a Recessionary Climate: What to Expect
- Fintechs will need to work harder to attract investment as global recession fears continue to impact funding levels.
- The disruptive potential is still attractive to investors. Fintechs that can offer customers something new can still win new users and funding, as evidenced by LendInvest’s recent success.
- The funding squeeze is not uniform. Fintechs in industries more shielded from recessions will find it easier to secure financial backing and sustain growth, as demonstrated by Monument Bank’s investment from Dubai Investments.
Conclusion
Despite the decline in funding for UK fintechs, there are still investment opportunities available.
Embedded finance is proving to be resilient, and disruptive potential continues to draw backers.
The funding squeeze is not uniform, and fintechs in industries more shielded from recessions will find it easier to secure investment.
