Volution Invests $100M to Supercharge UK Fintech Growth

The UK fintech sector is experiencing remarkable growth, with innovative companies like Allica Bank and Revolut leading the charge. Allica Bank, a London-based fintech, reported a profit of £29.9 million in 2024, effectively doubling its earnings. Meanwhile, neobank Revolut announced a staggering £1 billion profit in the same year, highlighting the city’s position as a global fintech leader. This surge is attributed to London’s rich financial heritage and its pioneering role in Open Banking. According to research conducted by HSBC Innovation Banking, there are now over 185 UK fintech startups valued at over £1 billion.

Volution Launches New $100 Million Fund

In light of the thriving fintech landscape, Volution, a UK-based venture capital firm, has announced the launch of a new $100 million fund aimed at investing in fintech, AI, and SaaS startups. This initiative is in partnership with Japanese VC investors, SBI Investment Co., marking Volution’s second dedicated fund after its initial $30 million fund.

Focus on Established Companies

Volution’s new fund is designed to target companies with established revenue streams that require additional capital for growth. According to James Codling, Managing Partner at Volution, the UK government is concentrating on productivity and growth, yet a structural funding challenge remains, particularly for early-stage companies post-Series A.

• Volution seeks to fund companies with product-market fit.
• Target revenue range for investments is typically between £5 million to £20 million.
• The firm aims to address the funding gap exacerbated by the venture market correction of 2021-22.

Codling emphasized the increasing need for this type of funding in the current market, stating, “There are a lot of funds out there struggling to raise new capital while dealing with existing portfolio issues.”

Previous Successes and Future Outlook

Volution has a track record of successful investments, having previously backed companies such as Signal AI, Flagstone, Cognism, and Zopa Bank. Their previous fund yielded three exits, demonstrating their capability in the investment space.

Investment Climate and Economic Ties

Tomoyuki Nii, a director at SBI Investment, highlighted the UK’s strengths as a global leader in fintech and AI, citing a robust regulatory environment, world-class universities, and a vibrant entrepreneurial ecosystem. He noted, “Our cornerstone commitment to Volution comes at a time when Japan and the UK government are strengthening economic ties to drive growth across both markets.”

Addressing Sustainability with ESG Initiatives

Volution is also committed to promoting responsible and sustainable growth through its ESG-focused initiative called “Carbon Carry.” This initiative aims to encourage sustainable practices across its portfolio.

Challenges Facing the UK Technology Sector

While the fintech sector is thriving, the broader UK technology landscape is facing challenges. Funding for Series A rounds has dropped by 44% in 2024 compared to the previous year, and the conversion rates for Series B funding have decreased by over 50% in the last five years. This downturn highlights the need for targeted investment strategies to support the growth of innovative startups in the UK.

For more insights on the fintech sector, explore our related articles on fintech trends and investment strategies.