Note that the research has recently been updated to cover data to the end of September 2019. Please contact Michael Pearson at michael@clarusinvestments.com for more details.

Our ongoing research on fintech financing, performance and valuation has recently been expanded to a total of 91 fintech startups in the UK. The analysis to the end of March 2019 has been published in a report commissioned by KPMG and Google Cloud and can be found at www.kpmg.com/uk/fintechfocus.

The objectives of the research are to get beneath some of the headlines to try to better understand how startups in the sector are actually developing, their typical characteristics, and the trends in financing, performance and valuation. The UK has an advanced fintech sector which can provide leading indicators for many other countries around the world. A few highlights from the research are:

  • The sample group of 91 companies have raised a total of £4 billion, are valued at £13 billion and have incurred cumulative losses of over £1 billion to date.
  • The median age of the companies, measured from the date of first round of funding, is just under four years and the median number of funding rounds is four. Therefore the average funding cycle is one year.
  • There are five unicorns in the sample (in dollar terms) – OakNorth, Funding Circle, TransferWise, Revolut and Monzo – with a combined valuation of nearly £7 billion.
  • The median amount raised at first round is £330,000 for a 20% share of the company but there are 12 companies that have raised £2 million or more at first round. Based on latest financial reports, median revenue growth in the last financial year was 89%, with losses increasing in 80% of cases.
  • Most of the companies in the sample were still making losses as of their last reported accounts. The exceptions are OakNorth, Blue Motor Finance, TransferWise, LendInvest, ClearScore and Wirex.
  • The median increase in price per share from first round to latest round for the sample companies is 7.1x and the median IRR is 82%. For 30 companies the IRR is over 100%.
  • Two of the companies from the sample are now in administration and two have achieved an exit opportunity, such as an IPO, for their funders.