(Bloomberg) -- Funding for UK female-driven fintechs dropped by two-thirds in the first half of this year compared with the same period last year, widening the gender investment gap in the male-dominated industry.

About $400 million was invested into fintechs founded or co-founded by women across 20 deals through June, according to an analysis compiled by Innovate Finance. That compares with $1.1 billion invested across 32 deals in the first half of 2021. The amount invested into UK fintechs founded by men rose 40% in the first six months of this year.

“Moving forward, we need to see less focus on mentorship and more checks being written,” said Nina Mohanty, founder of Bloom Money, a financial services app for migrants. “Women are over-mentored and under-funded; the lip service and glossy PR won’t cut it anymore.”

The disparity in financing for the year so far means investment in UK female-led fintechs make up only 4% of the total investments in UK fintechs -- down from 15% in the first half of 2021.

The decline comes against a darkening economic backdrop. Some fintechs valuations are tumbling with soaring inflation, higher rates and looming recession pressures turning some investors off what they see as risky and potentially overpriced assets. 

Tough economic times are disproportionately bad news for female founders seeking funding, according to Anne Boden, founder of UK digital bank Starling and chair of a government-backed taskforce to boost women entrepreneurs.

“In boom times investors may be more willing to ‘take a chance’, as they see it, on investing in women entrepreneurs,” she said. “But when economic uncertainty arrives, they revert to type and turn off the taps to women-led businesses. Of course, they are wrong; there’s a growing body of evidence to suggest that enterprises with at least one woman leader, outperform the pack.”

The Innovate Finance fintech investment data, which includes accelerator, incubator, angel, seed, early and later stages venture capital, as well as private equity growth/expansion funding, is based on PitchBook data that specifically breaks down figures for female founders. 

The drop in funding for the UK’s female fintech founders comes at a time when investment in UK fintech is bucking a decline in fundraising elsewhere. Total investment in fintechs globally was $59.2 billion in the first half of the year. Of this, the UK took in about $9.1 billion, a 24% year-on-year increase. In the US, fintech investments shrank by 10% to $25.1 billion.   

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