The UK is globally renowned for its thriving fintech industry. With London recently being crowned the European capital of fintech, the UK has been able to fortify its position on the global stage through a combination of international connectivity, a highly-skilled workforce, world-class business facilities and an investor community willing to get behind the country’s expanding community of innovative scaling businesses.
A new report released by the trade body Innovate Finance has revealed that Brexit has done little to dampen the appetite of investors seeking to inject capital into the industry. As a result, more than £430 million has been invested in UK-based fintech companies over the first two quarters of 2017. This amount is over a third more than the total amount invested in the same period last year, and puts the UK third globally for fintech investment.
For an industry that provides over 60,000 jobs and contributes more than £6 billion to the national economy, fintech will play a vital role for the UK’s post-Brexit economy. In light of this, the Government must work with industry bodies to ensure scaling businesses within this industry are able to fulfil their growth potential. This requires creative thinking, and a review of the current instruments that nurture long-term scale-up potential.
Tax-efficient investment schemes like EIS and SEIS should form part of this solution. By linking investors positive in their outlook towards UK businesses with high-growth SMEs, these schemes can provide a much needed capital boost for business. A prime example of this sits within IW Capital’s own portfolio; since 2014, IW Capital has proudly supported fintech scale-up WeSwap by leading a series of equity investment rounds. This funding has been fundamental to the company’s rapid expansion into one of the country’s leading fintech scale-ups.
For the UK to remain a leading international hub for fintech, it is important for the Government to consider the long-term benefits arising from tax-efficient investment schemes as a means of providing financial support for scaling fintech businesses.
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