UK fintechs are raising increased levels of investment despite domestic and global uncertainty, but the sector is still struggling with recruitment of talent and a significant gender imbalance, new research has found.
The total average investment raised so far this year by fintech firms grew a third compared to the same period two years ago, according to a report by EY and Innovate Finance.
Firms raised an average of £20m in 2019, up from £15m in 2017 – the last time the survey was carried out.
In their next funding round, the firms expect to raise a total of £2.6bn, with Series A funding – the first stage of venture capital fundraising – accounting for 26 per cent of this total.
Although the ongoing lack of clarity over Brexit does not appear to have weakened investor enthusiasm for fintech, navigating Brexit uncertainty was cited as a concern by 42 per cent of firms.
Concerns have been raised about the UK losing its position as the global fintech leader after the UK leaves the European Union, with sector leaders raising concerns about losing access to talent and capital.
Fintech founders urged the government to “not be complacent” about the UK’s fintech dominance last month.
Recruiting suitable talent was a key concern for the majority of the 224 companies surveyed for EY’s report, with 53 per cent citing it as a major challenge.
The most sought-after skills – software engineering, system architecture, and development – were also reported by respondents to be the hardest skills to find.
The report also found that a significant gender imbalance is persisting among the fintech workforce. According to the research, the sector’s gender split is 70.5 per cent male and 29.5 per cent female – virtually unchanged since 2017.
The disparity is even starker among fintech founders. Only 25 per cent of fintechs had at least one female founder, while 10 per cent had an equal split between male and female co-founders. Just two per cent of firms reported having female-only co-founders.
Tom Bull, EY’s UK head of fintech, said the report “makes it very clear that more needs to be done to try and redress the gender imbalance, which remains a challenge despite the efforts of government and industry to make fintech more diverse”.
Charlotte Crosswell, chief executive of Innovate Finance, said that despite high levels of investment, it was important to “support businesses in attracting and retaining talent, and back their ambition to scale globally.”
“Fintech is the future of our economy,” Crosswell added, “now is the time for industry to lead the way, backed by government, and ensure further growth.”