More money for UK fintechs
The UK Chancellor Philip Hammond has announced a plan to invest £400 million of venture capital funds into the British Business Bank, a government vehicle to lend money to British businesses. The idea is to support the home-grown business sector – including fintech firms – and to prevent them from being snapped up by international companies.
“I am taking a first step to tackle the longstanding problem of our fastest growing technology firms being snapped up by bigger companies, rather than growing to scale,” Hammond stated.
The examples of foreign-led acquisitions include Microsoft’s £201 million purchase of SwiftKey and Softbank’s £24.3 billion purchase of ARM.
The investment will unlock £1 billion of new finance for growing firms, Hammond believes.
Meanwhile, the European Commission (EC) has recently pledged up to €400 million to the European Investment Fund’s (EIF) new fund-of-funds, for the money to be spent on businesses in Europe – particularly start-ups – including in the fintech space.
The EC has also said it would look for three times more investment from institutional investors to make up to €1.6 billion available.
It is yet unclear how Brexit will impact on the terms of access to the EIF for the UK businesses. At present, its funds account for over a third (37%) of all money raised by start-ups in the UK in 2011-2015.