Anton Ruddenklau, Global Co-Head, KPMG Fintech comments on Female founded fintechs out performance.
A new report out today, Fintech Focus, launched during UK Fintech Week by KPMG in conjunction with Clarus Investments, finds that the median Internal Rate of Return (IRR) from the latest funding rounds, were notably higher for fintechs with female founders. Early investors in female founded fintechs received a median IRR of 112% compared to only 48% for other businesses of a similar age.
Anton Ruddenklau, Global Co-Head, KPMG Fintech said: “While the number of female founders or co-founders is low, the fact that they typically achieve a higher rate of return is a clear vote for more diversity.”
The report found that the median amount raised by UK fintechs at first round is £330,000 but there are 12 companies that raised £2 million or more. Fintech firms operating transaction or processing services are able to achieve higher valuations and access larger early funding rounds than fintechs providing more typical financial services activities to customers or businesses.
Just six fintechs in the sample are profitable or breaking even, whilst for the balance of the sample median losses after tax are increasing each year for their first five years. However, the oldest fintechs in the sample continue to receive funding in later rounds at increased valuations, which bodes well for longer-term confidence and growth in the sector.
Paddy Goodlet, UK fintech M&A lead, KPMG UK, added: “Appetite from corporate investors is growing fast: they made up 40% of total venture capital (VC) investment in 2018 – a fourfold increase from 2015.”
Anton added: "It’s really encouraging to see that investors are taking a longer-term view to investing in fintech firms. They expect losses in the early years as product development and scaling require significant capital. In order to scale, there is going to be an increasing need for more institutional and patient capital to support investment. Matching these sources of capital to fintechs is something that the industry must focus on as it grows.”
Notes to Editors
This study is based on a sample of 91 fintech companies in the UK across a range of verticals, of which 51 are providing financial services to consumers or businesses and 40 are providing technology or processing services to other financial institutions. The analysis considers financing, performance and valuation based on statutory filings with Companies House in the UK.
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