The following observations are based on research we have carried out on fintech financing and performance in the UK which was published in the report UK Fintech Focus May 2019 by KPMG and Google Cloud. For a copy of the report go to The research covers 91 fintech startups in the UK and is up to date as of March 2019. An updated report will be published in July 2020.

The returns for early stage investors in our analysis of fintech startups are very good on paper, and although returns decline as companies get older there is no apparent trend up or down in recent funding rounds after adjusting for the age of the company.

The median IRR from the first to the latest round for investors is 82% and the median increase in share price expressed as a multiple is 7.1x. For companies raising funds for at least 3 years, the highest IRR is Revolut at 332%, followed by Monzo at 211%.

The median IRRs measured from the previous round to the latest round are much lower for the companies fund raising for the longest – only 14% for the 10 oldest companies. For example, Nutmeg has been raising funds for 8 years and in their latest round in March 2019 the IRR from the previous round was 13%.

There are 21 companies in the sample which have reported new financing in the 6 months to 31st March 2019. The mean IRR for these companies, measured from the previous round to the latest round, is 70%. This is very similar to the age adjusted mean IRR at the latest round for the whole sample and hence we believe there is no clear trend in valuations up or down in the past 6 months.

The valuation to revenue multiple in Year 5 for the companies in our sample which are reporting revenues shows a very wide range. This illustrates that simple valuation metrics are not very useful in these early stages of development. For example, at the end of 5 years, the valuation to revenue multiple was 6x for iwoca and 33x for Atom Bank.

It is very difficult to say whether the fintech sector is overvalued as a whole though valuation appears high for many of the companies given their low level of revenues and continuing losses. Ultimately, what matters for investors is achieving a profitable exit and some could be big winners, but so far only 2 companies from the sample have had an exit and 3 companies from the sample are in administration.