London’s FinTech firms helped smash investment records in 2015
Peer-to-peer lender platforms and online money transfer services played a major role in raising $3.6 billion in venture capital funding for the UK’s technology sector in 2015, according to new data compiled by the Mayor of London’s promotional company London & Partners.
While the report defines “technology” broadly, encompassing Internet, telecommunications, computer software and hardware and computer services, it was London’s burgeoning FinTech sector that stood out, continuing to attract record funding last year with p2p platforms leading the way.
The UK was responsible for around 50% of all venture capital investments into London’s tech centre, the data reveals. Investments from the US came second at 29%, followed by Israel at 4% and Germany at 2%. The most active investor was Index Ventures, while others included Hoxton Ventures, 83North, Balderton Capital and Accel Partners.
The record year enjoyed by London’s fast-expanding financial technology sector actually amounted to a quarter of the total investment from all of the city's tech firms.
Mayor of London Boris Johnson MP greeted the data positively, claiming that it was unsurprising to see London’s tech companies attracting record investment levels, as the capital is widely regarded as one of the world’s leading financial centres and technology hubs. He added “Our world-class talent pool and our culture of innovation and entrepreneurial spirit are helping the sector to grow from strength to strength. We can expect the capital’s tech sector to continue to generate jobs and growth for the city’s economy for many years to come.”
London has become the leading destination for venture funding in Europe, besting Berlin. Across the pond, London lags behind New York and Silicon Valley. Even so, the UK accounted for an impressive one-third of all European venture capital during Q3 2015. This, according to CB Insights, amounts to 10% of worldwide venture investment.
The UK capital’s remarkably innovative and dynamic tech sector has been boosted by a growing number of venture capital firms choosing London as their base for setting up funds and operations. Octopus Ventures announced a $140 million fund in October 2015, rubbing shoulders with a host of other VC houses in London, including Hoxton Ventures, Index Ventures and Passion Capital.
The Mayor London’s tech ambassador, Passion Capital partner Eileen Burbidge, said “Investors are increasingly attracted by the diversity of London’s tech ecosystem but also our strengths in certain sectors such as FinTech.” London & Partners CEO Gordon Innes said that the capital not only houses exciting start-ups but businesses of genuine scale. Investors, he added, now clearly believe that “London offers a great return on investment.”
An example of one of FinTech’s rising innovators is London-based peer-to-peer lender Unbolted, which, uniquely, uses its online platform to offer secured asset loans. Unlike most other p2p platforms, borrowing from Unbolted’s lender pool does not involve intrusive credit searches, meaning that applicants leave no credit footprint behind when they apply for a loan. Instead, they place one of their high-value possessions (the asset) under the platform’s control for the duration of the loan, which is collateralised as security. Borrowers can also settle early with no penalty.
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