UK Fintechs Raise 89% LESS in Q1 Compared to Same Quarter in 2022

Yesterday, it was reported that the US market experienced a 25% quarterly decline in Fintech funding during Q1 2023 in comparison to Q1 2022. Today a similar report provided by Tracxn, indicates that the UK saw a whopping 89% decline during Q1 2023 in Fintech funding in comparison to Q1 2022 and 65% lower than Q4 2022, which generated $1.7 billion – which is said to be the

According to the report, in total $595 million was raised in the UK during the first quarter of the year compared to $5.5 billion in Q1 2022.

The UK is one of, if not the most, Fintech-friendly countries in the world. The report notes that Fintech adoption stands at 71% in contrast to the global average of 64%. The UK has the second largest number of Fintech startups after the US. During Q1 2022, the UK saw the highest funding of Fintechs according to the report so the industry was up against some pretty tough comps. Q1 of 2023 is said to be the least funded quarter in the last three years – since 2020.

Some notes of interest:

  • Late-stage funding was the most affected in Q1 of 2023, plunging 95% and 63% when compared with Q1 2022 and Q4 2022. Later-stage investments experienced $197 million, in comparison to $4.2 billion in Q1 of 2022 and $533 million in Q4 of 2022.
  • Early-stage Fintech startups booked investments worth $315 million in Q1 2023, a decline of 69% and 71% from Q4 of 2022 and Q1 of 2022 respectively.
  • Seed-stage funding saw a smaller drop of 5% from Q4 2022, having raised $83.6 million in funding in Q1 2023. The highest funding in Q1 2023 was observed in February, but it is still 83% lower than February 2022, which was the highest funded month in the past decade.

During the quarter, no new Unicorns emerged, and no IPOs took place similar to the previous quarter. However, there was a slight uptick in terms of the number of acquisitions, with 26 acquisitions in Q1 2023, as against 24 in Q1 2022 and 22 in Q4 2022.

Not a single funding round reached the $100 million mark in the in the first quarter of this year. Digital bank Zopa raised $92.5 million, making it the biggest amount raised in the sector during this period.

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