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2017 VC FinTech Investment Landscape

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Innovate Finance’s 2017 VC FinTech investment landscape provides investors, startups and the wider FinTech ecosystem the data to understand trends and capital flows as the FinTech market evolves. Overall figures suggest that the UK has had its best year on record and was a global leader in terms of capital invested and deal volume, second only to the US.

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2017 VC FinTech Investment Landscape

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  2. 2. 2 SUMMARY 03 GLOBAL 06 UK 14 APPENDIX 21 Powered by
  3. 3. 3 SUMMARY
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  5. 5. 5 THE 2017 FINTECH INVESTMENT LANDSCAPE SUMMARY Global • 2017 saw 1,842 deals globally, attracting $14.2BN of VC investment, a 18% decrease YoY. • The United States attracted the largest amount of VC investment at $7.0BN over 765 deals, a 22% increase on 2016 deal value of $5.8BN. • China, which raised the largest amount of VC investment in 2016, dropped to third place with $1.6BN of investment compared with $8.2BN in 2016, a 81% decrease YoY. • If the 2 China “mega-rounds” (Alipay and JD Finance - each over $1BN) are excluded as “exceptional” from 2016 figures, global investment increased 19.4%. • SoFi, the online personal finance company based in the United States, raised the largest round globally at $500M during Q1. • The most active global investor was 500 Startups with 49 investments. UK • The UK experienced its best year on record with $1.8BN over 224 deals of VC investment, up 153% on 2016. The UK ranked second globally in total Capital Invested and Deal Volume, behind the United States. • Challenger Banks (24%) and Money Transfer & FX (21%) were the top 2 verticals. • TransferWise, OakNorth, Funding Circle, Interactive Investor and Monzo led the top 5 top UK deals in the range of $90M to $280M of investment. Both TransfeWise and OakNorth ranked amongst the global top 20 deal list. • There were 10 Innovate Finance members in the top 20 UK deals. • 54% of investment into the UK was from non domiciled VCs, largely coming from North America (25%). Source: PitchBook 19-Jan-18
  6. 6. 6 GLOBAL
  7. 7. 7 GLOBAL FINTECH VC INVESTMENT 5 YEAR TREND 2017 has seen 1,824 deals globally attracting $14.2BN of VC investment, a 18% decrease YoY Source: PitchBook 19-Jan-18 3,420 8,317 17,006 17,437 14,240 1,123 1,632 1,993 2,015 1,824 0 500 1,000 1,500 2,000 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 FY 13 FY 14 FY 15 FY 16 FY 17 DealVolume CapitalInvested($M) Capital Invested Deal Volume -18%
  8. 8. 8 GLOBAL FINTECH VC INVESTMENT QUARTERLY ANALYSIS (2016 vs 2017) The 2 China “mega-rounds” JD Finance ($1.0BN, Q1 16) and Alipay ($4.5BN, Q2 2016) were the main driver behind 2016 being higher than 2017 in terms of Capital Invested Source: PitchBook 19-Jan-18 4,094 7,270 3,181 2,8923,025 3,275 3,973 3,968 613 493 452 457 594 470 433 327 0 100 200 300 400 500 600 700 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 Q1 Q2 Q3 Q4 DealVolume CapitalInvested($M) 2016 Capital Invested 2017 Capital Invested 2016 Deal Volume 2017 Deal Volume
  9. 9. 9 GLOBAL FINTECH VC INVESTMENT DEAL VALUE 2017 U.S. $7.0bn Canada $444m ≥ $500m $50m - $499m $10m - $49m Source: PitchBook 19-Jan-18 $14.2BN Invested Over 1,824 Deals
  10. 10. 10 GLOBAL FINTECH VC INVESTMENT DEAL VOLUME 2017 U.S. 765 Canada 63 1,824 Deals in 68 Countries Source: PitchBook 19-Jan-18 ≥ 50 10 - 49 2 - 9
  11. 11. 11 GLOBAL FINTECH VC INVESTMENT TOP 10 COUNTRIES (2016 vs 2017) The United States ranked top, both in Capital Invested ($7BN) and Deal Volume (765) Top 10 counties by Capital Invested ($M) Top 10 counties by Deal Volume Source: PitchBook 19-Jan-18 7,053 1,783 1,606 648 548 478 444 331 203 130 5,793 704 8,215 562 178 60 243 417 84 85 United States United Kingdom China India Hong Kong Sweden Canada Germany France Singapore 2017 2016 765 224 120 66 63 47 39 37 37 31 784 232 121 66 66 49 73 53 23 43 United States United Kingdom India Germany Canada France China Singapore Switzerland Australia 2017 2016
  12. 12. 12 GLOBAL FINTECH VC INVESTMENT TOP 5 FINTECH VC DEALS SoFi, an alternative lender in the United States, raised the largest global round of 2017 at $500M Name SoFi Country Sector Alternative Lending / Financing Date 21-Mar-2017 Series G Size $500M Name AvidXchange Country Sector Enterprise Software Date 08-Jun-2017 Series F Size $300M Name TransferWise Country Sector Money Transfer & FX Date 01-Nov-2017 Series E Size $280M Name E-Life Financial Country Sector Payments Date 03-Jan-2017 Series B Size $275M Name Kabbage Country Sector Alternative Lending / Financing Date 03-Aug-2017 Series F Size $250M Source: PitchBook 19-Jan-18
  13. 13. 13 GLOBAL FINTECH VC INVESTMENT TOP DEALS AND INVESTORS Two UK companies made it into the top 20 global deals. 500 Startups was the most active global investor Top global deals by capital invested ($M) Most active investors by deal volume Source: PitchBook 19-Jan-18, most active investors excludes deals without a disclosed deal value 500 300 280 275 250 240 220 203 200 200 200 166 160 146 145 140 130 127 126 130 SoFi (US) AvidXchange (US) TransferWise (UK) E-Life Financial (China) Kabbage (US) WeLab Holdings (Kong Kong) Dianrong (China) OakNorth (UK) Affirm (US) Feidee (China) Patym (India) Lightspeed POS (Canada) Bright Health (US) Futu (Hong Kong) Xiaoying Financial (China) Addepar (US) Clover Health (US) iZettle (Sweden) Bread Operations (US) Lemonade (US) UK Deal 49 38 31 21 18 16 13 12 12 12 11 11 11 500 Startups Y Combinator Startupbootcamp Techstars Ribbit Capital Digital Currency Group Anthemis Group New Enterprise Associates Index Ventures (UK) Hard Yaka Thrive Capital Social Capital Accel HQ in the UK
  14. 14. 14 UK
  15. 15. 15 UK FINTECH VC INVESTMENT 5 YEAR TREND 2017 has seen 224 deals attracting $1.8BN of VC investment, a 153% increase YoY Source: PitchBook 19-Jan-18 238 684 1,073 704 1,783 107 186 205 232 224 0 50 100 150 200 250 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 FY 13 FY 14 FY 15 FY 16 FY 17 DealVolume CapitalInvested($M) Capital Invested Deal Volume 153%
  16. 16. 16 UK FINTECH VC INVESTMENT QUARTERLY ANALYSIS (2016 – 2017) The top two VC rounds, Tranferwise ($280M) and OakNorth ($203M), fell into Q4 2017 Source: PitchBook 19-Jan-18 223 131 127 223 158 434 408 783 75 46 55 56 69 61 47 47 0 10 20 30 40 50 60 70 80 0 100 200 300 400 500 600 700 800 900 Q1 Q2 Q3 Q4 DealVolume CapitalInvested($M) 2016 Capital Invested 2017 Capital Invested 2016 Deal Volume 2017 Deal Volume
  17. 17. 17 UK FINTECH VC INVESTMENT 2017 VERTICAL ANALYSIS Challenger Banks and Money Transfer & FX were the top verticals in 2017, with 24% and 21% of investment deal value respectively Source: PitchBook 19-Jan-18 Challenger Banks, 24% Money Transfer & FX, 21% Alternative Lending / Financing, 17% Personal Finance / Wealth Management, 11% Payments, 5% Enterprise Software, 5% Institutional / Capital Markets, 5% InsurTech, 3% Prop-Tech, 3% Crowdfunding, 2% Cyber, 1% RegTech, 1% Digital Currencies & Blockchain, 1%
  18. 18. 18 UK FINTECH VC INVESTMENT TOP 5 FINTECH VC DEALS TransferWise and OakNorth Bank both raised rounds above $200M during 2017 Name TransferWise Sector Money Transfer & FX Date 01-Nov-2017 Series E Size $280M Name OakNorth Sector Challenger Bank Date 12-Oct-2017 Series Unknown Size $203M Name Funding Circle Sector Alternative Lending / Financing Date 19-Apr-2017 Series F Size $104M Name Interactive Investor Sector Personal Finance / Wealth Management Date 02-Jun-2017 Series Unknown Size $101M Name Monzo Sector Challenger Banks Date 07-Nov-2017 Series Unknown Size $94M Source: PitchBook 19-Jan-18
  19. 19. 280 203 104 101 94 66 53 50 45 41 40 40 36 27 26 25 25 25 25 23 TransferWise OakNorth Funding Circle Interactive Investor Monzo Revolut Salary Finance Receipt Bank 10x Banking Zopa WorldRemit Prodigy Finance PremFina PayBreak Digital Shadows Monzo CurrencyCloud Kalo Habito GoCardless 19 UK FINTECH VC INVESTMENT TOP DEALS AND INVESTORS There were 10 Innovate Finance members within the top 20 UK deals. Passion Capital was the UK’s top investor Top deals by Capital Invested ($M) Most active investors by Deal Volume Source: PitchBook 19-Jan-18, most active investors excludes deals without a disclosed deal value 7 6 6 5 4 4 4 4 4 4 4 4 4 Passion Capital Balderton Capital Anthemis Group LocalGlobe Seedcamp Ribbit Capital Notion Illuminate Financial Management Force Over Mass Capital Entrepreneur First Connect Ventures Barclays Accelerator Accel
  20. 20. 20 UK FINTECH VC INVESTMENT 2017 INVESTOR HQ ANALYSIS 54% of VC investment into the UK led by non domicilied VCs, with the majority coming from North America (25%) Source: PitchBook 19-Jan-18, analysis performed on deal volume only North America, 25% United Kingdom, 46% Europe, 14% Unknown, 6% Asia, 6% Africa, 1% Russia, 1% Middle East, 1%
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  22. 22. 22 APPENDIX
  23. 23. 23 THE 2017 FINTECH INVESTMENT LANDSCAPE APPENDIX 1: VERTICAL GLOSSARY § Alternative Lending / Financing – P2P lending, invoice financing, SME financing, e-lending platforms, credit scoring § Institutional / Capital Markets – B2B solutions for financial institutions (e.g. banks, hedge funds and other institutional investors) including innovations within capital market activities § Challenger Banks – new digital banks that are challenging the large established High Street banks § Crowdfunding – platforms that allow investment for projects / companies / equity § Cyber Security - technology designed to protect companies infrastructure from attack, damage or unauthorised access § Data & Analytics – analysis of data within the financial industry to support data driven decisions § Digital Currencies & Blockchain – digital ledger technology, in which transactions made in bitcoin or digital currency are recorded chronologically and publicly § Enterprise Software – financial software solutions for enterprises § Financial Inclusion – delivery of financial services to the unbanked / unbankable § InsurTech – technology applied to the insurance industry § Money Transfer & FX – money transfer, international remittance & currency conversion § Payments – innovation in payments, including cashless, online / ecommerce, mobile, B2B, merchant / POS, wallets, P2P, recurring § RegTech – technology applied to resolve issues regarding regulation within the financial industry § Personal Finance / Wealth Management – innovation within pensions, savings, personal financial management, investment platforms and management of personal assets and investments (e.g. robo-advisors) § Prop-tech – technology used to disrupt the property industry, including mortgages and investment Source: PitchBook 19-Jan-18
  24. 24. 24 THE 2017 FINTECH INVESTMENT LANDSCAPE APPENDIX 2: SCOPE OF REPORT DATA § VC deal value figures include the deal types: - Angel - Accelerator / incubator - Crowdfunding - VC (all rounds) § VC deal value figures include all deals completed or announced (verified to press releases) in 2017 § Deal volume figures include deals without a disclosed deal value, except when looking at top investors § UK VC deal value represents investment into FinTech companies which are Head Quartered in the UK Source: PitchBook 19-Jan-18
  25. 25. 25 Author Sophie Winwood Head of Partnerships sophie@innovatefinance.com

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