Mar 2016

FinTech – Less Ego More Sense?

A recent E&Y study suggests London is in the lead, globally, for Fintech but this needs to be considered alongside the fact that “early stage” investment is healthy in the UK, but “growth finance” is harder to come by. The unicorns are found elsewhere.. Why is this?

Is it because in London, series A and B investors are more risk adverse, which seems incorrect considering London is a capital markets and securities trading hub. Or could it be because UK based start ups are seen to grow more slowly and steadily therefore investors don’t realise their investment till far later? This to me seems more likely.

I’m not suggesting slow and steady is bad but I am suggesting that we need to understand, when there is appetite and ambition to grow and be funded for hyper-growth, what are London based FinTech firms limitations.

Could talent be a limiter – Although E&Y confirms that the London talent market enables a steady flow of the “right” Fin and Tech entrepreneurs does the London FinTech marketplace have the “right” commercial leadership talent to take these firms into rounds of “growth finance” and deliver hyper growth? The answer is yes, although there is much competition for their skills, experience and knowledge and if they are “right” will be handcuffed by the golden shackles of equity return.

In a recent conversation with a well regarded CVC it was pointed out that growth funding is given not only because the firm has the next game changing, world moving idea but also because the leadership team has shown an innate ability to take the company through the necessary growth stages within an appropriate time period so they can realise their investment.

My answer – less ego more sense. In some instances the title Founder / CEO is given for all the right reasons in others Chief Technology or Innovation Officers maybe more appropriate. To make London a paddock of FinTech unicorns we need leadership teams that will impress investors, not just with ideas but with proof of hyper growth. Then investment levels may rise from current £534m a year past NY’s £1.4bn and California’s £3.6bn.

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