Tracxn, a leading global SaaS-based market intelligence platform, has released its Geo Quarterly Report: UK FinTech Q1 2024. The report, based on Tracxn’s extensive database, provides insights into the UK FinTech space.

The UK is home to more than 13k FinTech companies and continues to be a global FinTech hub. Funding in this space surged in Q4 2023 but declined in the first quarter of 2024. This fall in funding can be attributed to the ongoing macroeconomic scenario across the globe. Despite this, the UK FinTech startup ecosystem ranked second globally in terms of funding in Q1 2024.

The UK FinTech startup ecosystem witnessed a total of $1.1 billion in funding in Q1 2024, a 15% decrease from the $1.3 billion raised in both the previous quarter (Q4 2023) and the corresponding quarter last year (Q1 2023). 

Seed-stage funding was the most affected in the first quarter of 2023, falling 68% to $36.1 million in Q1 2024 from $113 million raised in Q1 2023. This is also a decline of 55% when compared with the $80.4 million raised in Q4 2023. Early-stage funding stood at $366 million in Q1 2024, a slight drop of 4% as against $380 million raised in Q4 2023, but a growth of 15% compared with the $318 million raised in the corresponding quarter last year. 

Companies in this space secured late-stage funding worth $694 million in Q1 2024, a 23% fall from the $902 million raised in Q1 2023. This is also an 18% decrease from the $845 million raised in the previous quarter. 

Only two $100 million+ rounds took place in the first three months of 2024, as against five in Q4 2023 and one in Q1 2023. Neo bank Monzo raised $430 million in a Series H round, valuing the company at $5 billion. 

None of the companies from the UK FinTech startup ecosystem went public in Q1 2024, similar to Q4 2023 and Q1 2023. Further, the number of acquisitions fell to 16 in Q1 2024, from 24 and 18 in Q1 2023 and Q4 2023, respectively.  

Banking Tech, Alternative Lending, and Payments were the top-performing segments based on funding in Q1 2024. Companies in the Banking Tech space attracted investments worth $705 million in funding in the first three months of this year, which is an 88% and 249% surge compared with the amounts raised in Q4 2023 and Q1 2023 respectively. 

The Alternative Lending segment secured funding worth $285 million in Q1 2024, a drop of 64% from the corresponding quarter last year, but a spike of 517% when compared with Q4 2023. 

Among UK cities, London topped the list, accounting for 97% of funding raised by the overall sector during the quarter. FinTech companies based in London raised $1.1 billion in the first three months of 2024, followed by those based in Manchester ($27.5 million) and Leeds ($3.0 million). 

Seedcamp, Techstars, and Anthemis Group are the all-time most active investors to date in the UK FinTech space. MS&AD Ventures, SV Angel, and Nauta Capital were the lead investors in terms of seed-stage investments in Q1 2024, while Portage, Fidelity International Strategic Ventures, and QED Investors were the most active early-stage investors. CapitalG and Sprints were the top investors in terms of late-stage funding in Q1 2024.