In a significant move to fortify the UK’s fintech landscape, prominent names in the financial sector have joined forces to introduce the Fintech Growth Fund. This strategic initiative, which stems from the Kalifa Review’s observations of a £2 billion growth funding shortfall within the UK’s fintech ecosystem, has garnered support from key players including Barclays, London Stock Exchange Group, Mastercard, NatWest, and Peel Hunt.
Tailored to empower growth-stage financial technology enterprises positioned between Series B and pre-IPO stages, the fund’s inaugural capital injection into these businesses is slated for Q4 2023. With an anticipated annual activity of four to eight investments, ranging from £10 million to £100 million each, the fund is poised to make a distinct mark in the sector. The investment approach will revolve around equity and equity-linked securities, specifically in the form of minority investments.
The fund’s overarching ambition involves securing £1 billion from institutional investors to fuel its mission. Notably, initial seed funding contributions from Barclays, London Stock Exchange Group, Mastercard, and NatWest have set the wheels in motion for this transformative venture. As these strategic partners lay the foundation, the fund is primed to embark on its transformative journey.
Alongside the investment capital, the FinTech Growth Fund will provide strategic support to its portfolio companies to help them achieve their corporate ambitions, giving them access to relevant experience across fintech, venture capital, and the wider financial services ecosystem.
Peel Hunt, which is acting in an advisory position for the fund, notes that despite the attractiveness of the UK fintech sector, many entrepreneurs prefer to sell rather than to continue to build their companies.
“We believe that we are only in the nascent stages of the fintech revolution, and that over the next decade fintech as a sector will gain a meaningful weight in the FTSE 100,” states the firm in a research note. “In our view, FGF’s role should be critical in ensuring that the UK remains the fintech powerhouse in Europe.”
The UK FinTech Growth Partners executive team includes Angel Issa, former global head of corporate development & strategic investments at Nomura, Joe Parkin, former head of banks, digital channels and UK Inorganic at BlackRock; Kaushalya Somasundaram, former UK head of payments, partnerships & industry relations at Square and one-time global head of fintech partnerships & strategic innovation investments director at HSBC, and Phil Vidler – CEO of FinTech Alliance.
The fund is currently recruiting for a number of roles, including regional positions as part of its commitment to supporting businesses throughout the UK.
An advisory board, chaired by former Chancellor of the Exchequer, Lord Philip Hammond, will comprise a star panel of fintech founders and City grandees.
Phil Vidler, managing partner, comments: “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.”
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