Fintech Investment: Silicon Roundabout against Silicon Valley

By Madhvi Mavadiya | 6 January 2016

2015 saw “fintech-hungry” investors break records and raise $3.6 billion to fund UK technology companies, but how does this truly compare to fintech investment in Silicon Valley?

Research from CB Insights and London & Partners revealed that UK funding increased by 70% last year from the $2.1 billion raised in 2014 and this growth is set to continue this year.

Promoter of the London Mayor’s office, London & Partners, reported in July last year that British technology companies had already surpassed the investment figure set in 2014 with nearly $1.5 billion raised. As a fintech hub and occasionally termed as the fintech centre of the world, tech companies are thriving in this space, as CEO of London & Partners, Gordon Innes highlights.

London is rapidly becoming the most exciting city in the world for tech. Innovative entrepreneurs across the capital continue to produce exciting new companies which are attracting the eye of the world’s investment community. But five year after the tech city initiative was launched, London is now producing tech companies of genuine scale which are drawing serious money into the sector. It’s no wonder that tech is now such an important part of London’s economy.”

The future looks promising for fintech in London however, the Financial Times reports that these numbers are low in comparison to the grand scale of investment that is occurring in Silicon Valley. The US National Venture Capital Association stated that a staggering $35.7 billion was invested in tech companies by US venture funds in 2014.

Despite this, founding partner at venture capitalist Passion Capital and tech adviser to UK government bodies, Eileen Burbidge, believes that these figures show potential for growth for the British tech scene.

Last year it took London tech firms 9 months to reach the billion dollar mark, this year they’ve done it in six months. The city has become such a tech powerhouse because it excels over other tech hubs around the world. London combines the technology and digital innovation of Silicon Valley with the Wall Street financing heritage of New York and the policy making of Washington DC – all in one phenomenal city,” Burbidge explained last year.

The FT explores how UK challengers seem to be viable competitors for the Californian startups because of their proximity to London’s financial sector. However, British technology groups will be affected when investors become interested in tech groups that operate internationally, which could emerge soon as more and more cities are becoming fintech hubs.  

Burbidge dismisses this and remarks on the fact that the UK, as well as benefiting from a finance driven capital, the tech scene is relatively nascent. “I don’t think we saw quite the same degree of inflation as the States had. I think valuations ran a lot further ahead in the States than here, and if it’s slowing down a little bit there, that will have less effect here as we didn’t get ahead of ourselves.”

Top UK fintech investments of 2015:

1. Funding Circle: $150 million 

2. Zopa: $106.08 million

3. WorldRemit: $100 million

4. Ebury: $83 million

5. TransferWise: $58 million

 

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development