London has cemented its place as the leading centre for financial technology startups in Europe, with 2017 set to be a record year for investment, despite fears that Brexit would harm the industry.
Investors have pumped over £825m into UK fintech companies so far this year, according research from the Mayor of London’s official promotional agency, London & Partners.
London has become the fourth best city in the world for fintech venture capital investment over the past five years, behind San Francisco, Beijing and New York, the figures show. Firms in the UK capital have raised £2.4bn in early-stage funding in that time – five times more than the nearest European rival, Stockholm, and more than Paris, Frankfurt, Berlin and Amsterdam combined.
Funding for UK fintech startups dropped by more than a third last year, in part as a result of investors putting off making financial commitments in the wake of the Brexit vote. The latest figures suggest London has bounced back and is on course to beat the £983bn raised in 2015.
Separate research from specialist banking and investment firm Investec found that over one third of investors into London’s fintech sector in 2017 were based overseas.
The news comes as representatives of 12 of London’s fastest growing fintech companies prepare to join a mayoral trade mission to Money 20/20, a major global technology conference in the US next week.
Companies joining the delegation include foreign exchange banking app, Revolut, which recently raised $66m (£50m) and AI based ID verification company Onfido that received $30m in funding in September this year.
Nikolay Storonsky, chief executive of Revolut, said that talent, infrastructure, access to capital and a business-friendly legal system mean that,“London is without question the best city in the world to launch a fintech startup”.
He added: “In just two years, Revolut has raised over $90m in investment and attracted over 900,000 users. There is no doubt in my mind that a large part of our success is down to choosing London and the UK as our headquarters and home.”
London’s Deputy Mayor for Business, Rajesh Agrawal, hailed the investment figures but stressed that the capital’s success is reliant on continued access to the EU.
“Clearly Brexit poses major challenges but London’s position as a global financial centre and world-class technology hub is built upon strong foundations which cannot be replicated anywhere else,” he said.
“This highlights the need for a Brexit which enables London to maintain its place at the heart of the single market, as the continent’s financial capital.”