I, like many entrepreneurs and investors, am having to dig really deep into how I plan for a future that, by all accounts, will look very different to the past.
The last year has torched my memories of working, collaborating, networking across projects and deals with real human contact.
It has forced me, for the near future, out of London as my base and instilled new disciplines and ways of evaluating opportunities. I’ve invested in working on ways to compensate for a deliberate lack of physical proximity to build trust and empathy.
And while I realise that this global social adaption is totally pervasive, I do fear for the future of the UK, particularly the technology renaissance for which fintech was such a key contributor.
Last week did, however, bring some positive news:
The Kalifa Review of UK Fintech
The findings of this report were fairly predictable in terms of the key levers to ignite the sector – investment, policy, skills and international connectivity.
However the reality is the momentum achieved over at least a decade of work to place London on the global map as the leading fintech centre has been hugely impacted by capital flow stagnation and skills migration. This is due to competition, Brexit regulatory uncertainty and Covid 19’s impact on market growth.
The barriers to entry created by these factors for starting and growing a business in the UK means that other jurisdictions are rising and winning.
Remote working is also a reality and one which is developing. Talent is now global, digitally accessible and decentralised. The appeal of London as a great talent magnet is questionable.
The most notable call to action from the report was for the unlocking of institutional capital to create a £1bn Fintech Growth Fund of ‘sufficient scale’ to act as the catalyst in developing a world leading ecosystem. And drawing this capital from institutional capital – specifically from the £6 trillion UK market in pension funds.
This could be a major driver not only for a startup and scaleup boost – but also a massive signal to private market investors globally that the UK is very much open for business.
The Future Fund and Future Fund Breakthrough
The government has announced its UK-wide Future Fund. This new venture will take a stake in startups, with private venture capital matching its contribution.
This means that businesses who have been unable to access other government business support programmes, such as CBILS, because they are either pre-revenue or pre-profit and typically rely on equity investment, can access public monies on a matched fund basis.
This is in fact a convertible nature of loans from £125,000 to £5 million where the government can convert their take to equity in the next round.
The Future Fund: Breakthrough – a scheme amounting to £350 million – is designed to transfer public/private funds into life sciences, quantum computing or clean tech.
Tech Zero – Taskforce to tackle climate change
Led by green energy supplier Bulb and supported by Tech Nation, the taskforce has set itself the aim of accelerating the UK government’s plan to reach net zero emissions by 2050. A number of UK fintech companies such Starling, Revolut, GoCardless, Moneysupermarket Group and Onfido have joined the taskforce to support the UK to become the top destination for green investments by educating consumers on greener choices.
Despite bringing these moves together and overlaying the readiness of the UK to be relevant from a green/sustainable fintech or climate tech perspective, I still remain cautious and somewhat concerned.
With global investment in climate tech deals between end of 2019 and 2020 at $16 billion, European markets still represent a quarter of the total global investment.
What is evident is the lack of presence in the UK from climate tech investment hubs.
While these recent moves by the UK government and private market participants are positive signals against a tide of uncertainty and a year of difficulty, I question whether it will be enough to catalyse the stagnation and place of UK tech, fintech and green tech sectors back on the global map.
The pandemic and the departure from the European Union has come together to offer a perfect storm of uncertainty for the UK fintech sector.
However, there can be some optimism gained from the Kalifa Review which has the potential to act as a catalyst for building back in the wake of Covid. And some of the noises coming from the Treasury and chancellor Rishi Sunak in terms of alleviating the potential talent vacuum presented by Brexit are encouraging.
Ahead of his Budget, Sunak outlined plans for a fast-track visa for the fintech sector to make it easier for scale-ups to bring in skilled talent from abroad. This new unsponsored points-based visa aims to attract the best and most promising international talent in science, research and tech. If there is cross pollination between the various funds and regional hubs and London as outlined in the Kalifa review, then perhaps the UK can continue to be a powerful force on the world stage when it comes to innovation. If it can’t then this could prove to be catastrophic in what could well be a crucial year for growth and technology as we set our sights on economic recovery…