UK launches £1 billion fintech fund to compete with Silicon Valley
In an effort to bolster Britain’s global reputation as a fintech investment center, the U.K. has created an investment vehicle to support growth-stage financial technology companies until they go public.
The Fintech Growth Fund, backed by Mastercard, Barclays, and the London Stock Exchange Group, aims to invest between £10 million and £100 million in fintech companies, including consumer-focused challenger banks and payments tech groups, as well as financial infrastructure and regulatory technology.
The fund, which is advised by the British investment bank Peel Hunt, seeks to support companies in the Series C and higher phases of their funding cycles.
The venture was established in response to a 2021 government-commissioned assessment led by former Worldpay Vice Chairman Ron Kalifa, which examined whether the U.K.’s listing environment is unattractive for technology companies.
In a Wednesday interview with CNBC, Gautam Pillai, an equity analyst at Peel Hunt specializing in fintech, stated, “It’s certainly a beginning.”
It represents an uncommon commitment to a specialized fintech fund backed by industry titans. While there are fintech-focused funds such as Augmentum Fintech and Anthemis Group, the United Kingdom has yet to establish a government-led fintech-focused fund.
Particularly after the country’s exit from the European Union, which has cast some doubt on the U.K.’s status as a global financial center, Britain has been criticized by some in the industry for imposing barriers on fintech entrepreneurs and forcing them to consider listing abroad.
The London Stock Exchange has committed to a number of reforms to encourage fintech firms to float in the U.K. as opposed to the U.S. This is an especially urgent measure in the wake of British chip design firm Arm’s decision to forego a London listing in favor of New York.
“It’s all about finding the next Stripe, the next Worldpay, and the next Adyen,” Pillai explained.
Philip Hammond, the former British finance minister, is also an advisor to the fund.