Volution doubles-down on booming UK fintech with new $100M fund
The UK fintech sector is on a bit of roll. Allica Bank – a London-based fintech – recently announced it had doubled its profits in 2024, bringing in £29.9 million, while Neobank Revolut announced a £1bn profit in 2024. Companies of this nature continue to spring out of London, a city which has become a fintech global leader, partly because of its long financial heritage but also because it was a pioneer of Open Banking. There are now over 185 UK fintech startups valued over £1 billion, according to research from HSBC Innovation Banking.
So it's with that context that Volution, a UK-based VC investing in FinTech, AI, and SaaS startups, has launched a new $100 million fund.
Launched in partnership with Japanese VC investors, SBI Investment Co., this will be Volution's second dedicated fund following its first, which came in at $30 million.
Volution said a 'significant number' of Volution's existing LPs recommitted to the new fund.
Volution said it would aim at companies that have already established revenue streams but which require additional capital.
James Codling, Managing Partner at Volution, told TechCrunch that while UK Government is focused on productivity and growth there's a structural funding challenge, with early-stage funding evaporating post Series A. He said they are out to fund companies with product-market fit and a solid go-to-market strategy
'We back companies that are typically anywhere between five million in revenue and up to 20. That's a badly needed part in the market at the minute, and it's become increasingly so given what happened in the correction in the venture markets 2021-22. There's an awful lot of funds out there that are struggling to raise new capital and trying to deal with issues that they've already got within their portfolio.'
Previous companies Volution has backed include Signal AI, Flagstone, Cognism, and Zopa Bank. The previous fund had three exits.
In a statement, Tomoyuki Nii, a director at SBI Investment, said: 'The UK is a global leader in FinTech and AI, with world-class universities, a strong regulatory environment, and a thriving entrepreneurial ecosystem. These strengths make it an attractive destination for investment. 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.'
Volution is also running an ESG-focused 'Carbon Carry' initiative designed to encourage responsible and sustainable growth across its portfolio.
Although Fintech is doing well, the UK technology sector has faced a downturn with funding at Series A dropping by 44% in 2024 compared to the previous year, and Series B conversion rates plummeting by over 50% in the last five years.
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