2017 was another record year for investment. After a slow 2016, the number of deals made as well as the amount invested reached new heights, according to findings by Beauhurst. As always, both the largest volume of investments and the largest investment amounts were placed into growth-stage businesses.
2017 also saw several high value investments, including $66m for digital challenger bank Revolut, $50m for accountancy software firm Receipt Bank and $40m for lending platform Prodigy Finance
In 2016, the sector with the largest number of investment deals was Fintech, and 2017 saw a continuation of this trend, with Fintech once again leading the way, followed by Big Data and AI.
With the huge buzz surrounding the Fintech industry, and the number of large VC deals being made, it’s clear that Fintech is a burgeoning sector that is leading the way. But why is this?
Slice of the Future
The world around us is constantly changing – technology needs to adapt to reflect this. While industries such as sports and media have been using technology for decades, the financial sector has been cautious in its approach to using technology, as it is subject to more regulations, and involves higher risk level. Fintech is a means of introducing the financial sector into the modern era – and everyone wants to get involved. With banks, crowdfunding networks, money transferring sites, currencies and financial advisors all opting in to use technology, it seems that the future has finally arrived for the financial world. Investors often see an investment into Fintech as an investment into the technology of the future – explaining its popularity.
Another key reason that Fintech is dominating the investment sector is safety. A decade ago, the only household items connected to the internet were computers and mobile phones. Fast forward to 2018, and the Internet of Things has seen the introduction of televisions, refrigerators, vacuum cleaners, lights, and household assistants like Alexa, all connected to the world wide web. While having the internet connected to so many objects is convenient, it leaves us at greater risk of compromising our online safety. More advanced technology means more advanced hackers – which can lead to digital fraud and money loss. The Fintech sector is working hard to develop products which are almost impossible to hack, in order to make the internet safer for everyone. Investing into Fintech is investing into an internet that is safe and secure – and many investors like this idea.
At Your Convenience
In the 21st century, we expect a certain level of convenience. We make payments with our fingerprints, travel cities with a swipe of a card, and order food to our houses with just a click. Therefore, it makes sense that the world of finance holds a certain level of convenience as well. Fintech provides an added level of convenience for users; they no longer have to visit banks within traditional working hours, or wait days for cheques to clear. The added level of convenience that Fintech provides is something that everyone can benefit from, and is especially useful for international businesses who do not always operate within the same time zones. Fintech also enables the investment of funds to be a smooth, clear and accessible process, which in turn encourages more potential investors to become interested in the sector.
Going to Market
As outlined, Fintech is making the world easier for everyone. The development of technology is making our lives easier and more convenient, whilst keeping them safe. A smart investor knows that the more marketable something is, the more people are going to be willing to buy any product that comes out of it. Given that Fintech has so many applications, the type of products that can be developed are limitless. Therefore, many investors are choosing to put their money into Fintech as they know that there is a such a large market for it, and their funds could multiply.
2017 saw a huge number of deals into the Fintech sector, proving its place amongst the other big-time investment sectors such as security and data. Further developments in technology over the coming years will see this sector grow further, with a larger number of derivatives and pivots being formed along the way. If the patterns and trends of 2016 and 2017 continue, 2018 is set to be a great year for Fintech.