What capital for tomorrow’s fintech?

By - 26 May 2017

Fintech explodes around the world. They are also present in France (Leetchi, Lendix and Compte Nickel). They also grow in the United States (Oscar, Kabbage), Germany (Number 26), Israel (eToro) and China (ZhongAn, Qufenqi). 17 of the 50 champions of the sector are based in London, positioning the British capital as the world capital of fintech. But will she remain so?

London, a mature hub for young companies of fintech

London, the centre of traditional finance, has the resources to develop fintech young shoots, both in terms of technical infrastructures (high speed, high connectivity) and operational (incubators and accelerators such as Level 39, Barclays Accelerator). City-world, it also attracts international talent; More than 44,000 professionals are currently working in the fintech sector.

Fully aware of the economic stakes of fintech, policymakers are adopting measures beneficial to the expansion of the sector. A few examples are: a tax deducted from a loan through a peer-to-peer platform (Innovative Finance ISA) or the lighter process for obtaining FCA approvals (the regulator of financial markets).

Strategically positioned between two markets with a combined potential of nearly 900 million European and American consumers, London finally offers an advantageous position for fintech who seek to set up internationally. Another advantage is the ease of access to capital. More than half of the investments made in Fintech in Europe were made in London, with £ 357m invested in 2015, and corporate funds focused on fintech multiplied: Santander (£ 60m), Index Ventures (£ 328m) , Google Ventures (£ 76m) and Axa Ventures (€ 230m).

Leadership may weaken

If Brexit imports it on June 23, London could lose some of its attractiveness in the short term. The uncertainty and devaluation of sterling could reduce the flow of capital invested and impact the operations of young start-ups. More problematic is the possibility of excluding the country from the SEPA area and the European digital single market. Some heavyweights of the sector like Transferwise have already mentioned a potential move.

London will also face the rise of new centres such as Berlin, Zurich, Tel Aviv or even Shanghai. 42% of the top 100 start-ups identified by H2 Ventures and KPMG in 2015 came from Asia and Africa, two geographic areas with a concentration of capital and consumers for one, talent and a growing market Fast for the other.

Finally, with the rise of these new centres, London faces increased competition to attract international investors. Asian tech startups have thus raised nearly $ 4.8 billion in early 2015. It is likely that the US and Asian flows will be redirected to more local areas in the future.

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