London named Europe’s ‘unicorn capital’ for fintechs
London leads Europe in fintech ‘unicorns’, a title given to privately-held startups valued at over $1bn, reinforcing its dominance as a global breeding ground for tech unicorns.
According to Hurun’s latest index, nearly 80 per cent of the UK’s unicorns and future unicorns are based in London, with fintech being the most dominant sector.
Of the 137 British companies included in the report, 52 operate in the fintech space, making it the best-represented industry in the UK’s unicorn landscape.
This includes the UK’s highest-valued fintech unicorn, Revolut, which is now worth $45bn (£36bn), and boasts 18m users.
In 2020, the fintech raised $580m (£444m) in series D funding.
According to the European “unicorn and soonicorn report”, the UK and Ireland produced the most valuable unicorns in Europe, making up 38 per cent of the continent’s entire unicorn value.
Rupert Hoogewerf, chairman and chief researcher at Hurun, attributed the UK’s fintech dominance to its global financial standing.
“The UK’s well established banking infrastructure, deep talent pool, and regulatory framework have encouraged innovation”, he said.
“UK consumers are financially savvy and digitally engaged. Challenger banks like Monzo, Starling, and Revolut thrived because Brits are willing to ditch traditional banks for something faster, smarter and more transparent”.
The combined value of UK unicorns has surged to $172bn, tripling since 2020, with a number of companies on the brink of joining the coveted unicorn club.
Global competitors
London remains the dominant force in Europe, far outpacing rivals such as Paris and Berlin.
However, Hoogewerf warned, “the biggest challenge to the UK’s startup ecosystem is the pull of the US, which can write bigger cheques and offer a bigger market”.
For fintech unicorns alone, the US leads with 77, followed by the UK with 24, India with 15, and China with 11.
Hoogewerf explained why the UK lags behind its rival across the pond.
“The US dominates in investment funding and deep capital markets, providing tech firms with more opportunities to scale”.
To prevent promising startups from scaling abroad, he suggested the UK needs to expand government-backed growth funds and accelerate banking license approvals.
“While early-stage funding is strong, UK startups often move abroad for later stage investment and market expansion”, he said.
Beyond fintech, healthcare is the second-largest sector represented, led by Cambridge-based CMR Surgical, valued at $3bn (£2.41bn).
Other notable UK unicorns include Octopus Energy, now worth $7.8bn after overtaking British gas as the country’s largest household energy supplier.
The report comes as Britain returned to growth in the final quarter of last year, with GDP beating expectations, saving the Chancellor from the immediate risk of a recession.