UK’s Fintech Unicorns Sees Singapore as Fertile Ground for Expansion

UK’s Fintech Unicorns Sees Singapore as Fertile Ground for Expansion

by March 11, 2020

In what was another record-breaking year, investments in the UK tech sector soared to £10.1bn ($13.2 billion) in 2019, according to latest industry figures – a £3.1bn increase on 2018’s very strong figures and the highest level in UK history.

Research prepared for the Digital Economy Council by Tech Nation and shows that between January and December, UK companies secured a third of the £30.4bn raised during the year in Europe.

UK tech sector growth outstrips US and China

The number of rapidly growing UK tech companies soared as venture capital investment increased by 44%. Growth in VC investment exceeded 40% for the third year in a row. To put this growth into perspective, investments in France grew by a little over a third compared to 2018, while Israel’s investments rose by a fifth. The US and China, instead, both saw investment numbers plummet by 20% and 65% respectively.

Source: Tech Nation/DealRoom, 2020

On a global scale, the UK’s performance in 2019 means it now sits behind only the US and China in terms of total venture capital funding received in 2019 and on a city-level, London joins the Bay Area, Beijing and New York at the top of the world’s most-funded locations.

Collaboration between UK and Asian tech ecosystems is incredibly strong with investment in UK tech skyrocketing last year.  Almost half of the UK investments (£4.6bn) in 2019 came via US and Asian investors and the UK tech sector recently overtook the US for foreign investment per capita. Asia invested $2.8bn in 2019, more than double the full year for either 2018 or 2017, including a number of high profile investments such as Temasek Holdings into Benevolent AI. Additionally, when compared to Germany and France, the UK had the widest overall mix of foreign versus domestic investors.

Source: Tech Nation/DealRoom, 2020

While eight more billion-dollar companies or unicorns were created in the UK in 2019 – taking the total number based in the UK to 77 –  the amount being invested in early-stage companies increased, reaching £3.9bn in 2019 up from £3bn the year before.

Source: Tech Nation/DealRoom, 2020

4 Out of 8 New Unicorns are operating in Singapore

Since 2014, the UK has produced more than twice the total number of $1bn tech companies than any other country in Europe, and sits behind only the US and China when it comes to building fast-growing global firms.

In 2019, another eight UK companies reached unicorn status – Rapyd, CMR Surgical, Babylon Health, Sumup, Trainline, Acuris, and OVO Energy – meaning the UK has now created 77 billion-dollar businesses.

The UK’s tech unicorns are increasingly expanding into the Asian market and of these eight new unicorns, four have operations in Singapore, joining other well-known UK unicorns here such as Deliveroo, Revolut and OakNorth.

Singapore has also previously managed to attract UK-based fintech unicorns like Revolut and TransferWise painting a picture of the island nation’s appeal for tech startups to set up base here as a launchpad in Singapore.

Strong investment at early stage

Of the highest-value UK rounds, five companies raised more than $250m each, and three of those exceeded $500m in a single round.

2019 saw one of the UK’s largest ever Series A investments, made in payments processor ($230m) in May, and the largest UK round of all time, which saw $800m being invested in supply-chain fintech firm Greensill in October just five months after the company had raised $655m.

The UK leads the way in fintech, AI and clean energy

The UK’s success in attracting venture capital investment in 2019 also fuelled, in part, a surge in the UK’s best performing sectors – fintech, AI and deep tech, and clean energy.

UK fintech firms raised £4.1bn last year. This figure represents a 100% increase from 2018’s total of £2bn, as a result of both the Greensill and investments plus significant fundraising from the likes of World Remit ($197m), Monzo ($147m) and Starling Bank ($98m).

Furthermore, at the Singapore Fintech Festival x Singapore Week of Innovation and Technology (SFF x SWITCH) in November 2019, UK fintech firms Transferwise, OakNorth and Vox Smart were announced as the winners of the Global Fintech Award by the Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS).

In AI and deep tech, investments in Benevolent AI ($90m), Melody ($60m) and Wayve ($20m) helped push the investment total across these sectors to £2.5bn  – up from £2bn from 2018.

While clean energy is a smaller market, OVO Energy’s $260m deal, alongside $81m investments in photovoltaic and solar panel firm Oxford PV and BBOXX, similarly helped push 2019’s total investment in this sector to just short of $1bn for the first time, which is a 45% increase on 2018’s figures.

Natalie Black

Natalie Black

Natalie Black, HM Trade Commissioner Asia Pacific, said:

“Asian investors are taking a keen interest in the success of the UK’s tech sector and are enthused by our record of building unicorns and leadership in key sectors like AI and clean tech.

“The Government is supporting more and more tech companies across the UK who are looking to expand in Asia and I have seen first-hand a step change in collaboration and investment in this part of the world, which is bringing exciting opportunities at home and overseas.”