UK’s Non-London FinTechs Fight for Funding

In the north of England, the Manchester area has a booming FinTech startup community.

But as Bloomberg News reported Thursday, these companies are having trouble attracting the attention of the country’s funding and power base in London.

According to the report, citing data from consultancy Whitecap, the number of FinTech startups and scaleups in that part of the U.K. tripled to 124 in 2023 over a three-year period, making it one of Europe’s fastest growing tech hubs.

Among those companies is Financielle, a money-saving app geared toward women. Founders Laura Pomfret and Holly Holland told Bloomberg they spent the winter traveling Europe to court potential investors.

“There’s a lot of people in the North trying to do more,” said Pomfret. “But the UK investment landscape is incredibly London-centric.”

Bloomberg notes that startups in the north are playing in the same backyard as more established finance firms that have a presence in that part of England. For example, Revolut, one of the country’s largest FinTechs, has roughly a third of its British workforce based outside London as part of its remote-first working policy. Adyen, Klarna, Lloyds and Bank of New York Mellon also have Manchester offices.

Meanwhile, PYMNTS wrote last month about data from S&P Global showing that deal making and funding appear to be pressured.

In the first quarter of 2024, FinTechs took part in 529 funding rounds worldwide worth $6.58 billion. That’s a decline of 18%, in terms of the number of funding rounds, and a drop of 26% year on year as measured in dollar value.

“But as measured sequentially, against the fourth quarter, FinTech funding value was flat, and the deal count grew 13%,” PYMNTS wrote.

“As for the most notable gains, deals tied to banking tech logged $1.8 billion in funding and 72 deals, climbing from $1.7 billion and 62 deals last year. The payments segment remained pressured, as there were 127 rounds, representing $1.4 billion, down from 151 rounds and $3.5 billion in the year before the first quarter.”

Commentary from S&P Global pointed out that AI-focused firms are attracting the most attention and activity, but the industry at large could see strong growth in the back half of the year.

The confidence may be fueled by recent mergers and acquisitions, such as Nuvei’s $6.3 billion go-private deal earlier this year, which followed Nuvei’s own $1.3 billion acquisition of Paya.

And, as PYMNTS noted recently, mega-deals are seeing a revival in the wake of Capital One’s $35 billion bid to purchase Discover Financial.