UK fintech funding has dropped by 39 percent in the first half of the year compared to the same period last year. Innovate Finance in its report said that the reduction at seed level points to the fact that there is a lack of capital deployed to early-stage startups during the pandemic.
Jay Wilson, Investment Manager at Albion VC, said in the report: “We are still to fully understand the economic impact of Covid-19, but short of a long and deep recession which governments are trying everything to avoid, funding will likely continue to flow.” A shift in opportunity is taking place largely because of the pandemic. However, digitisation of business processes is at its peak during this time.
It is reported that the UK economy is not expected to hit a full recovery for the next few years and investors are likely to remain cautious while investing in early or mid-stage fintech startups.
Fintechs in the country have a massive customer base and proven business models. But investors are withdrawing from early-stage startups while seeking more established companies with better track records. For example, Startling Bank comprises more than 1.4 million customer accounts and $3.09 billion in deposits.