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In the loop: Twitter tumbles while fintech flourishes

Written by Eric Johansson on Friday, 28 July 2017. Posted in Insight, Analysis

This week saw Twitter struggle to attract more users, the UK government’s latest bid to boost cybersecurity startups and how global investment in fintech is set to break last year’s record

In the loop: Twitter tumbles while fintech flourishes

Fintech companies globally raised £5.2bn in the last quarter

Things are looking good for the world’s fintech startups. While the first quarter of 2017 saw global VC investment in the sector slow down, funding came back with a vengeance in the three months leading up to June. And if the pace of deals is kept up, investment could even overcome 2016’s all-time high by 19%.

Having looked at its own data from the second quarter, CB Insights, the venture-capital database, has released a new report revealing that fintech companies globally raised $5.2bn across 251 deals last quarter. The results also saw five more startups in the sector reach unicorn status, bringing the world total to 26 companies with a combined value of $83.8bn.

Funding in European fintech startups in particular is poised for a record year. Despite the number of deals dipping from 78 in the first quarter to 56 and raising a total of $498m, the continent is still on track to beat the 2016 result by 40% if the current investment pace is keeping up.

However, UK companies in the sector saw less investment during the second quarter of 2017.  Even though British fintech companies like Blockchain and Zopa – which respectively raised a massive $40m series B round and $41.2m series F round – raised a total of $164m across 15 deals, the number of deals fell by 40% and funding fell 52%. But it’s worth noting that the first quarter’s shocking surge was predominantly caused by the $100m deals to Atom Bank and Funding Circle.

Overall, it seems as if it’s a good time to be a fintech entrepreneur.

UK government to open new cybersecurity innovation centre

Israel and the US have taken the lead in cybersecurity innovation thanks to close collaborations between the countries’ universities, governments and startup communities. Fortunately, UK startups may soon enjoy a similarly nourishing environment as the UK government has recently launched several initiatives to boost the British cybersecurity sector. And this week it took another step by announcing the foundation of a new innovation centre.

Over the next three years the government will spend up to £14.5m to develop the new London centre in order to boost the country’s digital defences and businesses. Planned to open in 2018, the centre will help startups, scaleups and industry experts develop new technologies, while new entrepreneurs will benefit from access to technical mentoring, business support and advice to help them scale.

Commenting on the new centre, Matt Hancock, minister for digital, said: “Our investment in a new cyber innovation centre will not only cement [London’s] position as a world leader but also boost the whole country by giving UK firms access to the latest cyber technology and allowing startups to get the support they need to develop.”

The announcement came on the back of several pushes by the government to improve the sector protecting keeping Britain safe in the digital realm. As a part of its cybersecurity strategy, the government has already pledged to invest £1.9bn in the sector to enable universities to work closer through the launch of the Cyber Security Research Institute. And earlier this year GCHQ teamed up with Wayra to launch a cybersecurity accelerator.

With initiatives like these, it’s safe to say that British startups will soon close the gap between them and their peers in Israel and the US.

Twitter didn't add any new users last quarter

The markets rallied when Jack Dorsey returned as the permanent CEO of Twitter in 2015. With the network’s co-founder back in the saddle, many hoped that Twitter would finally turn around its dwindling share price, which had dropped steadily since the end of 2014, and attract more users. However, its latest quarterly report suggests that the social network is still struggling to do this.

The company had 328 million monthly active users in the second quarter of 2017. While that represents a 5% growth since the same period in 2016, it’s still the same number seen in the first quarter of this year. In a letter to Twitter’s shareholders, the Silicon Valley firm said that user growth was offset by “lower seasonal benefits and other factors”. However, the tech giant claimed users were more engaged than before thanks to more push notifications, email alerts and timeline improvements. While the social media company didn’t reveal its total daily active users, Twitter said that this number had increased by 12% thanks to the company’s efforts.

Following the news  the price for Twitter shares plunged by more than 10%. That being said, Twitter still beat Wall Street’s revenue expectations of $537m, increasing its revenue to $574m. However, this was still a 5% drop from the same period last year.

All in all, it seems there are still some ways to go before Dorsey can make Twitter’s investors happy.

DueCourse goes into administration

Nothing is ever certain in the world of startups. Entrepreneurs across the UK were reminded of this fact earlier this week when the fintech startup DueCourse went into administration just months after raising a £6.25m equity round.

Founded in 2014, the Manchester firm offered a cloud-based software allowing small businesses to access cash tied up in unpaid invoices. And it may have looked like the company was poised for great things after last September’s seed round, which included backers like Alex Chesterman, founder and CEO of  Zoopla, the property tech company, Simon Franks, co-founder of LoveFilm, the video-streaming service, and the VC firm Global Founders Capital. However, it has now been revealed that the company went into administration on July 14 and that corporate recovery firms Leonard Curtis has been appointed to oversee its restructure.

Commenting on the closure to Prolific North, the startup’s co-founder and CEO Paul Haydock said: “We have decided to close one of the companies in the group as part of a planned restructure.” No further information was provided.

This just goes to show that even companies with great ideas can run into difficulties.

About the Author

Eric Johansson

As feature writer and resident Viking, Johansson ensures EB is filled with engaging and eclectic entrepreneurial stories. While one of our freshest faces, he has sharpened his editorial teeth by writing about business, entertainment and fitness.

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