Funding for UK FinTech companies experiences a 37% decrease
In the first three months of this year, the UK FinTech sector saw a total of 111 deals worth £2 billion. However, new data reveals a decrease in the number of deals in the subsequent months, marking a slump in the sector compared to the beginning of the year.
This trend is not unique to the UK, as a slowdown in FinTech funding is part of a larger global trend. According to recent figures, there were 1,714 deals worth $27.3 billion in the first half of 2023, a significant drop from the 2,500 deals worth $31.7 billion recorded in the second half of 2022.
Wayne Johnson, CEO & Co-Founder of Encompass Corporation, has emphasised the importance of building investor confidence in FinTech. He notes that in the current turbulent market conditions, investors are turning away from loss-making, high-growth start-ups. Johnson also highlights the role of technology in fighting financial crime, particularly in the context of KYC process automation.
Steven Mooney, CEO of FundMyPitch, underscores the importance of funding for Small and Medium-sized Enterprises (SMEs) for economic stability and growth. He expresses concern about the lack of financial backing holding back these businesses with potential. Mooney emphasises the need to retain the UK's position as an international financial hub by providing financial backing to SMEs.
Johnson suggests that the UK's aim of becoming a science and technology superpower can be positively impacted by the FinTech sector. He advocates for continued development of game-changing efficiencies for banks, using automation technology as an example. Johnson also stresses the need for continued high investment to facilitate digital transformation and the development of emerging technologies in the FinTech sector.
Despite the decrease in funding, the UK FinTech sector has still managed to achieve a gross profit of £164 million in the first half of 2023. The total cash raised by UK fintech firms in this period stands at $2.9 billion.
Johnson and Mooney both agree that the FinTech sector is a key driver of innovation and international investment. They urge for the continued necessity of innovative solutions and rapid technology evolution in FinTech to maintain the UK's position as a global leader in the field.
The market conditions are unpredictable, but one thing is clear: the FinTech sector will continue to play a crucial role in shaping the future of finance.
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