Fintech start-up investment – highest ever on record

2018 saw the highest level of investment in fintech start-ups on record, with a total disclosed transaction value of $30.8 billion.

The latest Fintech M&A Market Report* from Hampleton Partners, shows that, as fintech start-ups mature, the average funding round has doubled in size when compared with the previous year.

Innovation remains strong across the UK, which continues to lead the way in Europe with record levels of investment following the lead of new unicorns like Monzo and Revolut. The continuous improvement in digital consumer experience has put retail banking ahead of the curve, while incorporating fintech into core banking products. Investment banks, on the other hand, have focused predominantly on integrating robo-advisory services.

Key trends from the report include:

  • The adoption of biometric technologies is becoming widespread amongst consumers, with smartphone fingerprint authentication and facial recognition for payments
  • Though AI continues to show promise as firms adopt algorithms and advanced modelling techniques for investment decisions, change is more likely to resemble a gradual process than a quantum leap into new data sources and methods
  • Winners in fintech are primarily emerging at a regional rather than global level, in similar fashion to traditional retail banking, reflecting differing business and regulatory conditions
  • The UK leads the way in Europe, breeding a new generation of innovators with record levels of investment in 2018. Yet despite these start-ups capturing a growing share of the market, even the biggest British fintech firms are dwarfed by America’s Stripe, Robinhood and SoFi. These, in turn, are outclassed by China’s Ant Financial, recently valued at $150 billion
  • As funding grows more selective, scrutiny of business fundamentals is on the rise

Jonathan Simnett, director and fintech specialist, says: “Going forward, it is anticipated that the largest fintech firms will soon realise value through IPOs in 2019. Meanwhile, most start-ups that have grown large enough to gain traction, attract a strong customer base and produce a profitable balance sheet, will remain small enough to be acquired by fintech and traditional incumbents leading to an ongoing process of consolidation and M&A.”

Beavis Morgan – Specialist business advisers to London’s tech sector

At Beavis Morgan, we work with a number of entrepreneurs and startups, helping them set up and run their businesses, whilst navigating the challenges and advising them on making the right decisions both now and for the future.

We also understand that whether you’re a start-up or a well-established business, cash is king and managing its flow is crucial to your immediate and long-term success. That’s why our independent finance brokerage, BM Structured Finance, is readily available to assist start-ups source the right funding for their individual needs.

Research & Development (R&D) tax relief has also proved to be a major boost to British business and, with Brexit looming, it is more important than ever that companies seek ways to unlock cash from innovation to help fund research and development into the ongoing enhancement of existing products and services.

Does your business undertake research and development? If so, speak to us today to set the benefits in motion. Our proven methodology offers a painless approach towards obtaining R&D tax relief.

For more information about how we can help you and your entrepreneurial business, contact Steve Govey, Partner within our Beavis Morgan Entrepreneur Support Team, Simon Belton at BM Structured Finance or your usual Beavis Morgan Partner.

Source: Hampleton Partners’ Fintech Market Report 1H 2019