UK Fintech Sector Regains Top Spot in Startup Funding

Fintech has reclaimed its position as the UK’s best-funded startup sector, following a surge in investment during the first quarter of 2024, surpassing climate tech which dominated investment in 2023.

Data from Dealroom and HSBC Innovation Banking reveals that UK fintech companies secured $1.4 billion across 73 funding rounds during this period.

Notable fintech funding rounds include Monzo, a challenger bank, raising £340 million, and Manchester-based AccessPay securing £18.8 million.

While fintech has historically been a leading technology sector in the UK, climate tech startups took centre stage last year, accounting for nearly a third of all investment raised.

Overall startup funding levels stabilised in the first quarter, reaching $3.9 billion, the highest in Europe. However, this figure remains below the $4 billion raised in the first quarter of 2023 and significantly lower than the peak of $12 billion in the same period of 2022.

The decline in startup investment since the second half of 2022 can be attributed to macroeconomic factors such as rising interest rates, prompting investors to adopt a more cautious stance.

Enterprise software emerged as the second-best funded tech segment, attracting $713.9 million in funding. Additionally, there was notable growth in ‘frontier’ technologies, with semiconductor companies raising $314.7 million and quantum computing startups securing $300 million.

London-based startups continued to attract the majority of investment, although there was substantial growth for businesses based in Edinburgh and Brighton, which saw a 406% and 209% increase in investment, respectively, compared to the first quarter of 2023.

Simon Bumfrey, Head of Technology and Life Sciences at HSBC Innovation Banking UK, expressed optimism about the UK innovation ecosystem’s promising start to the year. He emphasised the growth in investment across various sectors and the expansion of regional tech hubs.

Technology Minister Saqib Bhatti highlighted the significance of fintech leadership in attracting global investment and commended investors for supporting technologies like quantum and semiconductors. These technologies align with the UK’s strategy to become a science and technology superpower.