Lisa Jacobs, chief govt of Funding Circle and speaker at this yr’s London Tech Week, discusses the funding hole for scaleup stage tech companies within the UK and the function of monetary regulation in addressing it.
Is sufficient being performed to deal with the UK scaleup funding hole?
The UK has a longtime popularity as a launchpad for startups and a wealthy historical past of cultivating profitable expertise companies.
Our thriving tech ecosystem is a nationwide asset, however its continued success hinges on making certain these progressive corporations can scale successfully throughout the UK, whether or not by means of non-public or public markets.
Focused insurance policies are important to gas this development – each in making certain funding but additionally broader insurance policies to foster additional innovation and entice top-tier expertise.
In the case of funding, we now have a powerful enterprise capital ecosystem already in place in London and the federal government’s Mansion Home reforms and extension of EIS present a promising begin to unlocking affected person capital for development companies.
That stated, funding is nugatory except we even have the broader components there to make the UK an important place for innovation and to draw prime tier expertise in order that we are able to have companies begin and keep within the UK.
At Funding Circle, we offer finance to SMEs – not scaleups – however the spine of the UK economic system who account for 99.8% of companies, 60% of employment, and 48% of personal sector turnover. Right here, too, we observe that entry to finance could be a barrier to development.
That is exactly the place fintech lenders and different finance platforms play a pivotal function. By providing streamlined digital channels and environment friendly processes, we empower SMEs with fast entry to capital, bridging the hole left by typical routes.
The impression is tangible: in 2024 alone, lending by means of Funding Circle supported over 87,000 jobs, contributed £7.2bn to UK GDP, generated £2bn in tax receipts, and reached companies in each one of many nation’s 650 constituencies. Supporting a various and accessible funding panorama is vital to SME success, and by extension, the UK’s financial vitality.
The British Enterprise Financial institution by means of the Progress Assure Scheme has performed an important function in making SME finance out there over current years by encouraging lenders to help viable companies by sharing lending threat.
Extending the scheme past its present March 2026 expiration date would offer long-term certainty and confidence for each lenders investing in platform capabilities and SMEs planning for the longer term.
What sectors of tech ought to buyers be paying extra consideration to?
The UK has a thriving expertise setting, however there are some areas the place we’re world-leading, akin to fintech and biotech.
In Fintech, we now have a pure benefit due to a mix of a deep pipeline of expertise, regulatory and political help (e.g., by means of the FCA’s sandbox) a rising variety of innovation hubs and – in London – entry to one of many world’s most developed monetary ecosystems.
The maturity of the UK fintech market makes it a beautiful proposition, and over the course of the final twenty years or so, we now have spawned some nice fintechs – Sensible, Revolut, Monzo and Funding Circle – to call a couple of.
What’s extra, these companies ship actual worth for patrons and development in the actual economic system.
Funding Circle exemplifies the innovation that has made UK fintech a hit story by combining expertise and knowledge to construct superior experiences and merchandise for our clients.
Fintech ought to proceed to be a spotlight space as an progressive business in its personal proper, but additionally one which drives additional advantages to shoppers and companies throughout the nation.
Are there any areas of monetary regulation that want transforming?
At virtually 15 years outdated, Funding Circle has been out of the startup setting for some time.
Nonetheless, we consider strongly {that a} thriving start-up setting is vital for the economic system and development and that the UK dangers shedding out to different international locations which can be targeted on this space.
We have to make sure that the UK stays a beautiful place to begin and develop a enterprise – which means internationally aggressive tax schemes that help funding in startups – whether or not by means of EIS or worker share schemes akin to EMI; alongside a coverage setting that encourages innovation and incentives which can be engaging to internationally cellular expertise.
Monetary regulation must be seen alongside broader coverage help. We encourage coverage makers to suppose fintech first.
At this time, fintechs originate extra loans to SMEs than the clearing banks, so a fintech first strategy is important somewhat than a pleasant to have to make sure efficient coverage implementation.
In different expertise industries, a tech first strategy is important to make sure the long-term success of the expertise sector but additionally the nation’s financial development.
You possibly can watch Jacobs’ panel, The View from the CEO; Vital Tech Funding Selections Required At this time to Stay Related Tomorrow, at London Tech Week on Tuesday 10 June at 11:30 on the primary stage.
Learn extra: London Tech Week: Microsoft UK CEO on Britain’s AI future
