Innovate Finance recently hosted an event to unveil their ‘Capital Investment in UK FinTech in 2023: Insights and Trends’ report, ahead of their Global Summit in London scheduled for April.
The panel discussion was moderated by Janine Hirt, CEO of Innovate Finance, and featured insights from Simi Shah, project director of innovation and growth at City of London Corporation; Shachar Bialick, founder and CEO of Curve; Tim Levene, partner and CEO of Augmentum FinTech; and Andrew Murray, head of institutional strategic investments at Citi.
Reflecting on the challenges of 2023, the panel agreed that it had been a difficult year for fintech and the broader ecosystem, attributing some of the difficulties to the atypical market conditions of 2021 and 2022. Levene pointed out that during those years, a zero interest rate environment and an influx of non-traditional investors distorted the market, leading to inflated valuations for many companies.
Bialick characterized 2023 as a “bloodbath” for fintech startups, noting that only those companies that demonstrated exceptional performance in 2022 were able to secure funding. Looking ahead to 2024, Bialick expressed concern that many firms had not yet hit rock bottom, predicting that some might eventually fail, which could lead to layoffs and the disappearance of certain companies. On a more optimistic note, he suggested that this challenging environment could foster a robust mergers and acquisitions (M&A) landscape, which had been anticipated for 2023 but had not materialized.
Levene echoed this sentiment, suggesting a wave of strategic M&As might occur as corporate entities recognize the challenges of digital transformation. Shah highlighted an uptick in interest from US and international investors in the UK, noting the country’s reputation as an innovative hub attracting significant investment.
Murray reinforced the resilience of the sector, observing that recovery would vary based on sector and company maturity. He indicated that early-stage startups might experience a normalization of conditions with a slight increase in risk appetite, while later-stage fintechs would need to focus on generating more initial public offering (IPO) activity to drive further growth.