New £1bn fund to help support growth-stage UK fintechs

A newly convened fund will invest up to £1bn into growth-stage fintechs in the UK.

The launch of UK FinTech Growth Partners makes good on a key recommendation of the Kalifa Review, which sought to establish ways to cement the UK’s place as a fintech hotspot. These recommendations included establishing a fund that could support existing UK fintech startups, primarily by providing access to private capital.

As well as investing in the companies, the fund will provide “strategic support” that helps them achieve their corporate ambitions and grants them access to relevant experience right across the financial services sector.

It will start making its first commitments in the final quarter of this calendar year, with “a strong pipeline of opportunities already identified”, it says. It is aiming to make between four and eight investments a year totalling between £10m and £100m each, with recipients typically existing between the Series B and pre-IPO stages. But the fund will only make a limited dent into the fintech sector’s overall capital requirements, with the Kalifa Review estimating that there’s a £2bn annual funding gap facing growth-stage fintechs.

“The launch of a UK FinTech Growth Fund is a unique opportunity to ensure that innovative fintech firms can unlock the capital they need to scale and grow into globally consequential companies,” says David Schwimmer, CEO of the London Stock Exchange Group.

Fund builds on UK’s ‘vibrant fintech sector’

The fund has already secured backing from industry leaders including LSEG – as well as big banks Barclays and NatWest, Mastercard, and Peel Hunt.

Phil Vidler, Managing Partner of the fund, says: “The UK has always been at the forefront of innovation in fintech but there is a very clear and well-evidenced growth funding gap. The FinTech Growth Fund will address the lack of available growth capital by providing a first-of-its-kind domestic, growth-stage, fintech-focused venture capital fund backed by strategic investors. Our aim is to not only provide the capital needed for founders to scale their businesses, but to also engage with stakeholders across the nation to support the wider ecosystem. In doing so, we believe we can ensure the UK remains a global leader in fintech.”

Sir Ron Kalifa, author of the Kalifa Review, has welcomed the fund: “The fund represents another key building block in the support ecosystem for growth-stage UK fintech businesses. This is an important step forward towards ensuring the UK retains its leadership role in fintech,” he says.

Lord Johnson, a minister in the UK government’s Department for Business and Trade, pointed out that the UK already attracts investment worth US$12.5bn a year and is second only to the US in terms of the size of its fintech market, beating the next 13 European markets on inward investment combined.

Lord Hammond, Chair of the FinTech Growth Fund Advisory Board, adds:“I championed our vibrant fintech sector throughout my term as Chancellor and have long believed its success is vital to maintaining the UK’s role as a global financial services centre through the early adoption of new technologies, products and services.

“The FinTech Growth Fund directly addresses the investment gap facing growth-stage fintech businesses in the UK which was identified in the Kalifa Review. As such, I am confident it will help to sustain and create jobs and growth across the UK in this cutting-edge technology sector.”

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