Between June 2nd – 14th 2020, Innovate Finance, Tech Nation, and the Fintech Nationwide collectively distributed a 14-question on-line, nameless survey. With explicit regard to funding and funding, the aim of the survey was to collate and analyse information on how the UK Fintech Sector has fared towards the Covid-19 pandemic.
Of the 126 corporations who responded, 61% make use of lower than 25 people. Understandably given London’s magnetic pull of finance, 71% of respondents have been situated in London. This was adopted by 7% of respondents situated abroad, 7% within the Northeast, 4% within the Northwest, 2% in Scotland, 2% within the East of England, 1% within the Southwest, and 0% in each Wales and Northern Eire.
When it comes to funding, nearly 70% of smaller UK Fintech corporations (these with 0-25 workers) have a cash runway of 6 months or much less.
Moreover, 77% stated they’re apprehensive about their subsequent funding spherical. Given this, it may come as no shock that smaller Fintech corporations are at increased danger of being negatively impacted by Covid-19.
Charlotte Crosswell, CEO of Innovate Finance, stated:
“It’s evident that the FinTech sector faces a significant funding gap as a direct result of COVID-19. We need to act fast before it’s too late. If we fail to address this, we risk losing many companies in the fastest-growing sector in the UK economy – one that has enormous potential to transform every aspect of our lives and underpin the digital future”.
Amongst these smaller FinTech corporations, 76% admitted they meant to use for, or have already utilized for one of many UK authorities help programmes designed to prop up struggling companies within the present local weather. The Coronavirus Job Retention Scheme and Bounce Again loans proved significantly fashionable, adopted by Innovate UK Scheme, CBILs, BBILs, and Future Fund.
Regardless of this, because the UK lockdown which commenced on March 23rd, 72% of survey respondents stated they haven’t acquired any funding. For people who have, 10% sourced funding from Angel funding.
That is worrying. Christian Faes, Chair of the Digital Finance Discussion board, stated:
“The government has spent the better part of the last decade building a world-beating FinTech sector. However, there’s now a growing fear that a large part of that great work is at risk of being undone. The FinTech sector has a vital role to play in the UK’s economic recovery. If we are to leverage this innovative technology to help consumers and businesses, it is clear that firms will need targeted government support to attract capital”.
As for technique, 60% of survey respondents stated they’re contemplating adapting their technique to not solely survive, however thrive within the post-pandemic world. Simply over a 3rd talked about diversifying their income (32%) or pivoting their enterprise (30%). To show the fragility of start-ups, 11% want to shut or mothball their firm.
The survey, whereas helpful, presents a bleak outlook for UK FinTech startups. Innovate Finance commented:
“the growing funding gap will need to be bridged if the sector is to fulfil its potential to transform the UK economy and boost financial wellbeing as the country emerges from the crisis”.