Rising interest rates, surging inflation and the shockwaves caused by the war in Ukraine brought an end to a decade-long global venture capital frenzy last year.

According to the data, the UK’s fintech sector attracted some $12.5bn worth of capital, down from a bumper year in 2021 which saw $13.5bn pumped into the country’s fintech firms.

London firms attracted the lion’s share of the investment with $10.2bn invested in 2022, down only five per cent from 2021 amid a sharp global slump.

Contractions in UK funding were markedly smaller than the global average as total global investment fell by nearly a third to $92bn, with the total number of investment deals around the world tumbling to 5,263 from 6,146.

Janine Hirt, CEO of Innovate Finance, says: “UK fintechs are holding the fort in securing great levels of investment in challenging economic times, a testament to the resilience and strength of our sector. 

"Our latest report shows that the UK is still receiving more investment in fintech than all of the next 10 European countries combined, and remains second in the world only to the US. We must continue to work together with industry, government and regulators to build on this momentum and maintain the leadership of the UK as a global centre to start, scale and grow a fintech business" 

Commenting on the findings, Khalid Talukder, co-founder of London fintech firm DKK Partners says: “London’s fintech industry has consistently proven itself to be both robust and ambitious in the face of economic challenges. As businesses brace for a turbulent 2023, fintech firms can play a vital role. Our industry can and will bounce back quickly, driving growth, job creation and enabling businesses to reach their full potential.”