Open for (fintech) business
In Planning growth, Raising finance, Rapidly scaling - 10 months ago - 5 min
Open for (fintech) business
Connecting start-ups, investors and advisers is a vital part of supporting London's vibrant fintech sector.
Investors encouraged by the rise of London’s fintech sector have started to look at the possibilities for long-term growth. Our Ready.Fund.Grow. event series, hosted by Grant Thornton’s Growth Finance team brought together a room packed with some of the most innovative young companies and underlined how pivotal London remains as a fintech incubator.
Use the network
While the number of great ideas and companies in the capital is growing, what marks London out – and what explains why so many start-ups are taking the leap from good to great in the city – is the community and network that supports them. That ranges from the major banks locating their fintech labs in the city to the capital’s network of Universities attracting talent from across the world all drawn by London’s energy and infrastructure. Imperial, for instance, boasts its own fintech hub, working with banks and tech companies to foster the next generation of companies.
A further example of London’s supportive environment is Level39, a community of just over 200 companies based in Canary Wharf. Ben Brabyn, Head of Level39, pointed out that London’s business infrastructure is a real differentiator. “If you’re sure you have an idea that can make finance better, then there is no better place to be,” says Brabyn. “If you’re in Level39, you’re within a five minute walk of 30% of the world’s financial services.”
Organisations like Level39 have sprouted in recent years to support London’s fintech start-ups. Brabyn says: “That is to create conditions that allow entrepreneurs the chance to focus on what really matters: growing their companies by building relationships with some of the world’s leading financial services businesses.”
That confidence was echoed by the panel of investors we brought together to give their perspective on what matters to financiers in the fintech space. Christopher Steinau represented Northzone, whose current £350 million fund is focusing more and more on fintech, with 11 active investments including Zopa and Market Invoice. As a corporate banker-turned-fintech investor, Steinau is ideally placed to explain the mega trends that are cementing London’s place as the pre-eminent fintech hub.
In his view, recent changes to banking regulation are critical to London’s continued reputation in the sector.
“We’re excited about the unbundling of banks and the regulatory environment that facilitates that, which is unique to Europe generally but London in particular,” Steinau explained, pointing to initiatives like PSD 2 and the regulatory sandbox, which should remove significant barriers to innovation by opening up the banking space to smaller, more agile companies to collaborate with banks and experiment with new tech. “We think we’ll see more opportunities opening up for start-ups to build great businesses without the need to build a brand bank from scratch,” Steinau said.
Looking at banking in new ways
The way banks operate is being disrupted from all sides. This creates a huge opportunity for fintechs. One of the first beneficiaries has been Revolut, the personal banking app with a stated aim of shaking up personal finance. The company has acquired 2.5 million customers in three years and is gaining 7,000 users per day.
Revolut’s Chief Marketing Officer, Chad West reminded us that the financing landscape in the capital is the perfect launchpad: “We’ve got some of the most notable fintech Venture Capitalists (VCs) invested with us, and that was after we ran a crowdfunding campaign on Crowdcube which raised £1 million in 14 hours (with a further £18 million pledged).”
But, he said, VCs are not simply looking for profitable companies. “They are looking for brands that can scale up, go global and become an international brand with millions of customers.”
The Revolut story resonated strongly with the investor panel. “Anything that solves financial pain points within the industry is of interest to us,” said Aman Ghei of Finch Capital, another Zopa investor. “We look at late seed to Series-A funding and London is a great place to be for us.”
Look to innovate
Panellist Henry Mason of Dawn Capital said that when looking for companies to back, innovation is the key. “Once you’ve proved you’ve got a durable concept it then becomes about constantly innovating,” he said. “One product or tool might have got you here, but the smart companies recognise that the same thing might not get them to the next stage. So we want to see that the entrepreneur is giving this thought – have they found other areas into which they want to grow?”
Achieving that growth, Ben Brabyn pointed out, requires more than simply identifying a problem and its solution. The influence individuals and businesses wield in the increasingly important field of social media, and how management teams work with others, matters too. “One London-based investor was asking me about a particular fintech entrepreneur. What he seemed most interested in was how influential she was; not only in the broader community, but also in her sector. He’d deduced that she was well connected in the ecosystem, and that she was able to exert her influence among her peers.”
One defining message from the evening – echoed across the panel and the audience – was that London’s fintech community has no shortage of great ideas and innovative tech. However, the successful businesses will be those most able to find and work with the right partners, from investors and advisers to mentors and peers.
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Luckily there is no shortage of networking events for fintechs in London, but as Bradley Jones, Growth Finance Manager pointed out, the chance for start-ups to not only meet their peers and investors but also make connections with one of London’s best connected advisory firms in the start-up space is a great opportunity. “We’re excited about London’s fintech scene and we’re delighted to be able to bring so many interesting players together.”
You will have the opportunity to learn, share common experiences and network at our series of events and workshops, as well as benefit from our services designed to support your growth plans.
Grow your network by signing up to the G community or get in touch with a member of the team directly team today on 08081 722350 or drop us an email: G.Enquiries@uk.gt.com