UK’s fintech ecosystem shows stability
In 2024, the UK’s fintech startup ecosystem emerged as the second most funded globally, trailing only the US. Despite its historical prominence, 2024 marked a five-year low in funding, attributed to factors such as evolving regulatory complexities, heightened investor caution due to fraud and cybersecurity concerns, and macroeconomic challenges like inflation and rising interest rates.
Total funding for the year amounted to $4.9 billion, representing a minor 2% drop from $5 billion in 2023 and a 57% decline from $11.5 billion in 2022. Late-stage funding fell 13% to $2.1 billion in 2024 from $2.4 billion in the previous year (2023). Early-stage funding rose 19% year-over-year to $2.5 billion in 2024 from $2.1 billion in 2023. Seed-stage funding, however, plummeted 43% to $265 million from $467 million in 2023.
Abound raised $1 billion in a Series B round, making it the largest funding round in the UK’s fintech sector in 2024. This was followed Monzo, which raised $191 million in a Series I round, at a valuation of $5.9 billion.
Alternative lending, banking tech, and payments were the top-performing segments in 2024. Alternative lending led with $1.53 billion in funding, a 67% surge from 2023, driven primarily by Abound’s $1 billion round. Banking tech companies raised $1.21 billion, a 28% increase from the previous year, while the payments sector saw a 25% decline to $621 million.
The overall fintech sector witnessed 87 acquisitions, an uptick from 81 in 2023, including the $3.22 billion acquisition of Preqin by BlackRock being the most notable.
London continued to dominate the UK’s fintech landscape, securing 94% of total funding and solidifying its position as the third-largest globally funded city in this sector. Fintech startups based in London raised $4.5 billion in 2024, followed by those based in Andover ($120 million), Maidstone ($33 million), and Tortola ($33 million).
Seedcamp, Techstars, and Anthemis Group, are the overall all-time top investors in the UK fintech startup space. In 2024 CIE IIITH, Y Combinator and We Founder Circle were the lead investors in the seed-stage in 2024, while CommerzVentures, Fidelity International Strategic Ventures, and AlbionVC took the lead in early-stage investments. TCV and CapitalG were the most active in late-stage investments.
The UK government has undertaken various measures to revitalise the sector, including regulatory reforms, funding initiatives, and innovation accelerators. Key initiatives like the FCA’s Regulatory Sandbox, the Open Banking framework, the Global Financial Innovation Network (GFIN), and the AI Sector Deal have positioned the UK as a leader in policy-led innovation.
Despite challenges, the UK remains a pivotal player in the global fintech landscape, underpinned by strong government support and London’s consistent leadership.
Findings by Tracxn
