Fintech firms growing faster than other start-ups, research shows

A study carried out by online investment platform SyndicateRoom with research company Beauhurst has shown fintech companies are growing twice as fast as start-up businesses from other sectors.

The study looked at more than 500 UK start-ups and found there has been a 63 per cent annual growth in the value of early-stage investments in financial services firms, compared to 30 per cent for start-ups in other sectors.

Strongest

TransferWise was found to have shown the strongest growth in value over the past seven years, experiencing a compound annual growth rate (CAGR) of 183 per cent. The online money transfer company’s CAGR topped not only other financial services firms but also start-ups across all other sectors.

The research stated that the UK continues to be heralded as the fintech capital of the world, but also highlighted the risks of early-stage investment. 14 per cent of the firms in the report are failing, with the result that investors in these businesses suffered a complete loss of value.

According to the study, an investment of £10,000 into the 519 start-ups seven years ago would now be worth £63,848.

Profitability

SyndicateRoom Chief Executive and Co-Founder Gonçalo de Vasconcelos commented that while the value of this cohort was just under £1.6bn in 2011, by 2016 this had grown to £8bn. Twelve months later, it is now worth more than £10bn.

He added: “What’s more, the cohort has returned over £3.7 billion to shareholders, demonstrating the long-term profitability of early-stage investing.”