How the UK is encouraging Fintech investment from overseas
The government is actively inviting foreign Fintech firms to come and set up their businesses in the UK after Brexit. So far, more than 50 start-ups are planning to move their businesses to London, boosting this already buoyant sector.
Institutions in the City and government will welcome companies from more than 13 countries. They will be from both inside and outside the EU bloc, in a renewed bid to keep encouraging growth in the Fintech sector.
Welcome development
It’s a very welcome development for start-ups and our Fintech industry, and was sparked by new figures showing how well we did last year. The UK attracted more investment into Fintech start-ups than China managed in 2017, equating to a cash influx of $1.8bn (£1.3bn).
Last year’s record year for start-up investment in the UK has eased many people’s worries about a potential economic slowdown following the vote to leave the EU.
London as a world-leader
The Department for International Trade (DIT) and the Foreign and Commonwealth Office (FCO) have been working with the City of London, Natwest and the London Stock Exchange to ensure London is recognised as a world-leading Fintech hub.
Companies from more than 12 countries visited the UK recently, with one offered a placement at Natwest’s Entrepreneurial Spark accelerator.
VC investment record high
The record high reached by venture capitalist (VC) investment into UK Fintech in 2017 has gone against a general global downturn for this sector. Investment into our Fintech sector grew faster than in other countries. Around £13bn of cash flowed into Fintech start-ups, representing an increase of more than 150% on 2016. Even more impressively, it’s a bigger increase than either China or the United States.
The US attracted $7bn work of Fintech investment in 2017 (an increase of 21%), and while China topped the list in 2016, investment dropped by 80% putting them in third place last year.
This massive fall in investment to China contributed to the overall decrease of 18% in global Fintech investment, which stood at $14.24bn in 2017. China had benefited in 2016 by two ‘mega’ rounds worth $1bn each boosting them to an exceptional figure, according to a report by Pitchbook and Innovate Finance.
Post-Brexit vote bounce back
The figures for 2017 are a stark contrast with the UK’s fortunes in 2016. Two years ago, investment rocketed in China but dropped by 33% in the UK following the vote to leave the EU.
For 2017’s improved investment, research shows that investors are putting more cash into fewer deals. The number of deals for 2017 declined by 224 on the previous year. This signals a shift in attitude by investors, with more care being taken and only high-quality Fintech start-ups receiving investment.
Top global deals
Out of the 20 biggest global deals made in this sector last year, two were for UK firms: OakNorth (an online bank) and TransferWise (peer-to-peer money transfer service). The other three deals making up the UK’s top five were for Interactive Investor (online investment platform), Monzo (digital, mobile-only bank) and Funding Circle (peer-to-peer lending marketplace). More than 50% of the investment came from outside of the UK, and a quarter of that from North America.
It’s clear that London is a world-leader in finance and technology, and this is driven by our focus on talent and legislation. This allows the UK to attract the investors and entrepreneurs who are making tangible, positive changes to the Fintech sector.
Freddie Achom
