London trails only San Francisco in fintech race

Pandemic or not, investors are continuing to pump money into global fintech companies, according to the latest survey data.

Compiled by London & Partners and Dutch database company, the report shows that San Francisco remains the world leader with the sector attracting $5.1 billion in venture capital (VC) investment between January and September this year.Second in terms of VC was London, which attracted $3.6 billion over the nine months, well ahead of New York's $2.2 billion. In fact, the 169 deals in London so far this year were more than the 107 count in San Francisco, and well ahead of the total going to Paris, the second most popular European destination for fintech VC, which amassed 40 deals.Laura Citron, CEO of the international promotional agency London & Partners, said: “World-leading fintech scale-ups were born in London out of the 2008 financial crisis and today London’s fintech companies are innovating to respond to changing demands caused by the pandemic."These new investment figures show London is a well-established global fintech capital and I am confident we will continue to see growth in the city’s biggest tech sector. The UK capital is a natural home for fintech because it combines the power of global financial markets with a deep tech talent pool, supportive regulation and an early-adopting customer base.”Although global investment flows are below last year’s levels because of Covid-19, in the first three quarters of 2020 London’s fintechs have topped the total 2018 VC investment of $2.3 billion. Additionally, in the first half of this year, London fintechs claimed 57 per cent of European VC investment in the sector.Fintech remains one of London’s largest and best performing sectors, accounting for 44 per cent of all VC investment in tech companies in the capital so far this year.
US investors are continuing to constitute major players in the UK fintech scene. Of the $3.6 billion invested into London fintechs so far this year, $2.2bn came from 50 funding rounds including at least one US investor, accounting for 61 per cent of total fintech investment - a 32 per cent increase on 2019 when $1.6 billion of the $5.1 billion investment into London fintechs included a US investor.American fintech firm Plaid recently opened a London office in Shoreditch, opting for the UK capital as their first new home outside of the US and Canada.Keith Grose, head of international at Plaid, said: “When we were looking to expand outside of North America, the UK was an obvious choice."We opened our first international office in London’s Shoreditch as we knew there was a thriving and supportive ecosystem in the UK capital, home to like-minded fintechs. As a fintech company based in London you have access to investors, clients, world-class talent and savvy customers all in one city, making it a unique place to be.”Additionally, the world’s largest eCommerce investor, Canada’s Clearbanc, last week launched in the UK and committed to investing £500 million in UK-based eCommerce businesses. The move represented Clearbanc's first expansion outside of North America.

Read more news and views from David Sapsted.

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