This article looks back on an article we did in February which predicted the top 10 UK fintechs to watch for 2017. Were we right? How have those fintechs performed and what has 2017 done for them?
What we thought then: The fintech industry has seen tremendous growth in last decade. The sector now supports over 61,000 jobs and turns over billions in revenue for the British economy. The UK has grown in stature to be a global hub on the fintech stage, in terms of investment, employment and the number of fintechs in the market. A report by the UK government estimates that the UK fintech sector represented £6.6bn in revenue in 2015 and attracted £524m in investment. Therefore, consumer adoption of fintech is becoming increasingly mainstream.
What we think now: 2017 was always going to be a big year for fintechs as the incumbent banks looked to hedge a section of the market post PSD2 and GDPR. That’s certainly what we’ve seen, with many prominent collaborations. For that reason, the fintech sector is set to break investment records this year, some £825m according to Reuters, double on 2016. Whilst the terms of Brexit are no clearer, the fact that London attracted 90% of investment suggests any hint that the fintech capital of Europe would move to the continent were unfounded for 2017.
Here are five more:
Total equity funding: $7.38m (now $7.6m) +2.98%*
Where they were then: Trussle, the online mortgage trading company, is a rising star in the fintech industry. The start-up company provides solutions and answers to those looking to invest with a hassle-free process. Searching over 11,000 deals from 90 lenders, Ishaan Malhi, CEO and Founder of online mortgage broker Trussle says: "Getting the right mortgage through traditional routes is complicated, stressful, and time-consuming. We launched Trussle in December 2015 to address these issues, and in doing so became the UK’s first online mortgage broker.
“The service has proved popular. We’re now managing over £1 billion worth of mortgages on behalf of thousands of homeowners across the UK who want to ensure they’re on the most suitable deal. However, there are still more than three million homeowners across the country paying their lender’s higher Standard Variable Rate. We’ve made it our mission to put mortgage switching at the top of the public agenda in 2017, helping those people collectively save billions a year."
Where they are now: Following their funding round in early February to raise £4.5m ($5.68m) backed by Orange and Growth Capital, and existing investors LocalGlobe, Zoopla and Seedcamp, Trussle went on to join forces with Revolut in April to give users direct access to their mortgage brokering services. With the Bank of England’s interest rate increase and the recent stamp duty relief for first time buyers, it makes you wonder whether 2018 will be this mortgage provider’s busiest year as millennials come flocking for an innovative way to acquire property.
Total equity funding: $58.5m (now $90m) +54%*
Where they were then: Iwoca was created to help make credit and loans of up to £100,000 available to small businesses. Christoph Rieche, CEO of Iwoca, started the company in 2011 when the economy was recovering from the recession and banks hadn’t picked up the confidence to invest in small businesses. The technology behind Iwoca allows the company to access the risk of investing in small businesses which can open doors to the funding needed for lower costs.
This fintech company is supported by the EU and the European Investment Fund, helping small businesses thrive in the community.
Where they are now: 8 days after the time of writing the previous bio, Iwoca partnered with NatWest through Capital Connections to provide SMB loans, a significant collaboration for the six year-old startup. Iwoca further joined forces with PayU and Xero to make it easier for SMEs to get loans. Those connections and the increase in total equity funding suggests 2017 has been a good but quiet year for the loan provider.
Total equity funding: $373.2m (now flat) --%*
Where they were then: Funding Circle made headlines at the end of last year for raising $100 million in capital funding. The peer-to-peer lending marketplace allows investors to lend money directly to small and medium businesses. In 2016, the company saw a total of £85 million raised. This grew its investment portfolio to over £300m.
Samir Desai, Chief Executive of Funding Circle said he expected that lending through the site would “create a further 50,000 new jobs, supporting economic growth in the UK, US and continental Europe”.
Funding Circle is expected to create more buzz in 2017, with greater funding projects to be seen in the upcoming year.
Where they are now: Funding Circle is yet another peer-to-peer lending fintech on this list that has had a busy year expanding their business and investment opportunities. They currently boast a 6.6% annual return for investors and have earned £156m in interest for investors. They’ve lent £3 billion to UK businesses in a total of 43,251 loans (since 2010). Funding Circle received full FCA authorisation in May before forming a partnership with Aegon in August that saw the Dutch group fund £160m of loans helping 2,600 UK businesses.
Funds raised to date: $18.69m (now $28.3m) +51.42%*
Where they were then: Crowdcube is an investment crowdfunding platform that lets customers hand pick the businesses they want to back and invest in. The company is backed by more than 570 private investors, who have invested over £3m across multiple verticals of investments. The leading equity crowdfunding platform has become the first in the industry to hit the £200 million mark in capital raised.
“We predicted that investment rounds would get bigger in 2016, with the average amount raised going up. In our experience, this prediction definitely rang true with the largest crowdfunding rounds to date having been completed on Crowdcube this year. By the end of 2016 116 raises would have been done on Crowdcube, raising a total of £69m for ambitious businesses in the last 12 months alone,” comments Luke Lang, co-founder of Crowdcube.
Where they are now: In the third quarter of 2017, Crowdcube registered £1m in company revenue, with 70 pitches. Their pioneering iOS App has generated £5.6m in investment since its launch a year ago. Crowdcube now counts 430,000 investors amongst its community. A total of £25.6m was invested in the last quarter with 31 successful raises closing to investment. Crowdcube’s partnership with SeedInvest, a US crowdfunding platform, and more recently, CrowdBoost by Virgin StartUp, suggests serious inroads in the international crowdfunding market and healthy future planning.
Total equity funding: $58.6m (now $393m) +570%*
Where they were then: Based in the heart of the UK capital, LendInvest is the UK’s leading online property lending and investing businesses. The rise of digital transactions for consumers in the fintech space allowed LendInvest to excel quickly. With millennials preferring to transact online rather than face-to-face, fintech companies have taken note of this disruption and taken full advantage of it.
LendInvest’s investment in loans to date is impressive, with £32m in revenue for 12 months (to March 2016) and a £3.4m profit in the same time frame. Furthermore, its portfolio of properties funded are over 2,700, with an average of £310,135 lent per property funded. The total value of properties funded are a staggering £1,522,509,679.
Where they are now: Tipped by Business Insider as a ‘Future Billion Dollar business’, the proptech startup has certainly had a busy year. In June they received a major boost in market reputation with their third SQ1 Servicer Quality Rating from European ratings agency ARC Ratings. Of most significance was Lendinvest listing a £50m retail bond on the London Stock Exchange in August, which was quickly oversubscribed and shut down.
In September, LendInvest announced the strategic partnership with Clever Lending, a specialist lending solution. Sonny Gosai, Head of Specialist Lending at Clever Lending said “It is very exciting for Clever Lending to be able to provide market-leading criteria for a variety of bridging, commercial and development funding products from LendInvest. We are delighted to be working with such a well-respected and established lender to be able to offer more solutions to introducers and their customers. I’m confident that we’ll have a very successful partnership.” November saw Lendinvest launch into the Buy-To-Let sector with loans available from £50,000 to £5 million. If that doesn’t say, serious long term investment in property, we don’t know what does.
The proptech startup has extended its portfolio to 3,500 funded homes to the tune of £1,109,100,318 total lent. Total value of properties funded extends to £1,778,762,510. For these and more numbers in detail, check out Lendinvest’s Annual Report.
Keep an eye out in the New Year for our predictions and UK startups to watch in 2018.