Fintech Founders call out government in new report
It has been a year since the Kalifa Review into UK Fintech was published, but so far there has been little progress made with implementing its recommendations.
The latest report from Fintech Founders, Closing the Fintech Funding Gap, calls for action to tackle the funding gap highlighted by Ron Kalifa, setting out an eight-point plan to improve the funding landscape for the UK fintech sector.
The Kalifa Review showed that there was a £2bn growth capital funding gap, meaning many entrepreneurs feel the need to sell at the growth stage rather than continue to build their businesses in the UK. Closing the Fintech Funding Gap addresses this pressing issue, and proposes solutions which will allow UK fintech businesses to achieve their full potential.
These recommendations – which include extending existing tax incentives to fintech companies and unlocking more sources of long-term, patient capital – aim to widen the funding landscape, as well as deepen existing sources of funding, and making it easier for investors to support fast-growing fintechs.
Changing existing investment rules around pension funds is just one example of an action long-promised by the government but yet to be delivered. This is despite the clear benefits of unlocking £6 trillion of potential growth capital.
Together, the recommendations in this eight-point plan represent a decisive next step in the journey to deliver the government’s ambition of a truly world-leading fintech funding landscape, which will ultimately benefit consumers with superior financial services offerings.
This report comes on top of Fintech Founders’ most recent Summer Survey of its members, which revealed the widespread feeling of scepticism about the government’s response to the Kalifa Review. Only one in five founders thought the Review would make a positive difference for their business and – more strikingly – of all those who welcomed the Review, more than two thirds said that the government is not interested in acting on its recommendations. The survey also showed that access to funding remains the most commonly cited challenge for founders.
The Kalifa Review made clear that the UK could lose its status as Europe’s leading fintech hub if it does not act to support start-ups and plug the funding gap that currently exists. One year on and this is an even more pressing issue.
Commenting on the report, Christian Faes, co-founder of LendInvest and chair of Fintech Founders said: “The UK currently has a strong international position when it comes to fintech, but we risk throwing this away. If the Government is serious about fintech it needs to act to make sure that UK fintech companies can access the funds they need to grow and compete.
The Kalifa Review was promising but a year on and hardly anything has actually been done by the UK government. The government needs to stop talking the talk and start walking the walk if we are to retain our status as a fintech hub.”
