The UK fintech landscape is thriving, with Allica Bank announcing a profit of £29.9 million in 2024, a significant increase, while Neobank Revolut reported profits reaching £1 billion. This growth reflects London’s status as a global fintech hub, bolstered by its rich financial history and innovations such as Open Banking. Research from HSBC Innovation Banking highlights that there are over 185 fintech startups in the UK valued at over £1 billion.
In this vibrant setting, Volution, a UK-based venture capital firm focused on FinTech, AI, and SaaS startups, has launched a new $100 million fund. This fund, developed in collaboration with Japanese venture capitalists at SBI Investment Co., follows their initial successful fund of $30 million. Volution has seen strong support from its existing limited partners who are keen to invest further.
The firm is targeting companies that have already achieved revenue, looking to provide them with the necessary capital to scale. James Codling, Managing Partner at Volution, noted the existing structural funding challenges, particularly after Series A funding, emphasizing the need to support companies with established product-market fit and robust market strategies. He highlighted the market gap for funding between revenue streams of £5 million to £20 million, exacerbated by the venture market corrections of 2021-22.
Volution’s portfolio already includes notable companies such as Signal AI, Flagstone, Cognism, and Zopa Bank, with the previous fund producing three successful exits. Additionally, Tomoyuki Nii from SBI Investment underscored the UK’s strengths in fintech and AI, noting its top-tier educational institutions, regulatory framework, and dynamic entrepreneurial scene, which attract investment as Japan and the UK strengthen economic ties.
Furthermore, Volution is implementing an ESG-focused initiative named “Carbon Carry,” promoting sustainable growth within its investments. Despite the positive trajectory of fintech, the broader UK technology sector has faced challenges, with funding at Series A experiencing a 44% decline in 2024 compared to the previous year. Series B conversion rates have also seen a significant drop of over 50% in the past five years, illustrating the ongoing funding difficulties the sector faces.
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