London fintech startup investment is on the rebound in the first quarter of 2017 thanks to Funding Circle, Monzo and Currencycloud deals

Lynsey Barber
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It looks like fintech is attracting more investment after falling last year (Source: Getty)

Investment into fintech startups in London is on the rebound, fresh figures seen exclusively by City A.M. suggest.

Startups working in the hot tech space attracted £177m in funding in the first three months of the year, more than any quarter in 2016 and its highest since the second quarter of 2015.

It comes after cash flowing into fintech in 2016 was found to be down by a third on the previous year.

Read more: Fintech patents jump in "arms race" between banks and startups

But the fresh figures compiled by London and Partners and Pitchbook, indicate a comeback driven by several high profile deals for startups in London, where the majority of fintech firms are based.

Peer-to-peer lender Funding Circle kicked off the quarter by clinching £82m from investors in January. Digital challenger bank Monzo and Currencycloud also bagged more than £20m each.​

The new figures follow a week of fintech events designed to shore up investor confidence in the sector post-Brexit vote at which chancellor Philip Hammond praised the UK's world-leading sector, but warned that it must continue to attract "the best and the brightest".

The data, released ahead of London Tech Week in June, also reveal the total amount invested across the tech sector since the EU referendum has now passed the £1bn mark. Deputy mayor for business Rajesh Agrawal welcomed it as "proof that London remains open to investment, talent and innovation from all over the world".

Fintech has attracted the most cash over the last five years, followed by mobile, software and e-commerce. But it's sectors such as robots and drones, big data and artificial intelligence which have been the fastest growing.

Read more: UK tech star issues stark warning over the future of fintech after Brexit

AI and machine learning attracted £86m in funding last year, rocketing from just £3m five years ago.

“Over the course of the last decade London has become a global hub for the technology sector. More recently, our expertise in fintech, artificial intelligence and robotics has shown that the city is at the cutting edge of technological innovation," said Russ Shaw of Tech London Advocates.

“London’s strength derives from the city’s diversity, rich pool of talent and global connections. This has been the basis for our considerable success, and it is important to protect these factors as our tech sector continues to create more jobs and wealth.”

A separate report echoed the concerns over access to talent. A shortage was cited as the biggest risk to fintech in the capital by members of tech startup space Level39 at Canary Wharf.

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