The United Kingdom has taken a significant step to bolster its position as a global FinTech investment hub by launching a £1 billion investment fund, announced Wednesday (Aug. 16) by UK FinTech Growth Partners.
The fund, called the Fintech Growth Fund, aims to support growth-stage financial technology companies until they can go public. This move comes in response to criticisms that the U.K. has been posing barriers to its FinTech entrepreneurs and forcing them to consider listings overseas.
Backed by major industry players such as Mastercard, Barclays, and the London Stock Exchange Group, the Fintech Growth Fund plans to invest between £10 million ($12.7 million) to £100 million ($127 million) into a range of FinTech companies. These companies include consumer-focused challenger banks, payments tech groups, financial infrastructure providers, and regulatory technology firms. The fund will be advised by U.K. investment bank Peel Hunt and will focus on supporting companies at the growth stage of their funding cycle.
The creation of the Fintech Growth Fund was prompted by a government-commissioned review led by former Worldpay Vice Chairman Ron Kalifa. The review examined whether the U.K.’s listings environment is unattractive for tech firms. The fund marks a significant commitment to supporting the FinTech sector, especially as it is backed by mega-industry players and is the first FinTech-oriented fund to come about from a government-led strategy.
The U.K. has faced criticism that it poses barriers to FinTech entrepreneurs, particularly after its exit from the European Union. This fund addresses these concerns and encourages FinTech firms to float in the U.K. rather than seek listings overseas. The London Stock Exchange has already committed to a number of reforms to attract fintech firms to list in the U.K.
Gautam Pillai, an equity analyst at Peel Hunt, believes the fund is a positive step forward. He told CNBC, “It’s about finding the next Stripe, the next Worldpay, the next Adyen.” The fund aims to identify and support promising FinTech companies that have the potential to become global leaders in the industry.
The U.K. is already a hotbed of FinTech innovation and ranks second only to the U.S. in terms of the scale of its fintech industry. According to a report from Statista and CNBC, the U.K. is home to 16 of the world’s top 200 fintech companies. However, the industry has faced challenges recently, with the valuations of several prominent companies dropping sharply. U.K. fintech investment also plummeted by 57% in the first half of 2023, according to KPMG.