UK Fintech Growth Spurs $100M Volution Fund to Support Scaleups

The UK fintech sector is experiencing remarkable growth in 2024, with notable successes such as Allica Bank doubling its profits to £29.9 million and Revolut reporting a £1 billion profit. London’s position as a global fintech hub is strengthened by its rich financial heritage and pioneering role in Open Banking, fostering an ecosystem that now includes over 185 fintech startups valued at over £1 billion.

In response to this vibrant landscape, Volution, a UK-based venture capital firm specializing in fintech, AI, and SaaS, has launched a new $100 million fund. This fund, created in partnership with Japanese VC SBI Investment Co., marks Volution’s second dedicated vehicle following its initial $30 million fund. The new fund targets companies with established revenue streams, typically between $5 million and $20 million, that require additional capital to scale.

James Codling, Managing Partner at Volution, highlights a structural funding gap in the UK market, where early-stage funding has diminished post-Series A. Volution aims to fill this gap by backing companies with proven product-market fit and strong go-to-market strategies. This approach addresses challenges faced by many funds struggling to raise new capital following the venture market corrections of 2021-22.

Volution’s portfolio includes successful companies such as Signal AI, Flagstone, Cognism, and Zopa Bank, with three exits from its previous fund. The partnership with SBI Investment also reflects growing economic ties between the UK and Japan, leveraging the UK’s strong regulatory environment, world-class universities, and entrepreneurial ecosystem to attract investment.

Despite fintech’s success, the broader UK technology sector faces challenges, with Series A funding down 44% in 2024 and Series B conversion rates dropping over 50% in five years. Volution’s new fund aims to support companies navigating these headwinds, emphasizing sustainable growth through initiatives like its ESG-focused Carbon Carry program.

This strategic funding approach is critical for maintaining the UK’s fintech momentum and ensuring that promising startups can transition from early success to market leaders. By focusing on companies with proven revenue and scalable business models, Volution’s fund addresses a vital gap in the venture capital ecosystem, fostering innovation and economic growth within the fintech and AI sectors.