A new funding vehicle designed to provide growth-stage capital to UK fintechs has launched with backing from Barclays, the London Stock Exchange Group, Mastercard, NatWest, and Peel Hunt.
The Fintech Growth Fund was proposed in the Kalifa Review of the UK’s fintech ecosystem, which identified a £2 billion funding gap. This fund primarily targets financial technology companies in the Series B to pre-IPO stages, with the first capital deployments expected in Q4 2023. On average, the fund plans to make four to eight investments annually, ranging from £10 million to £100 million. All investments will be minority stakes in equity and equity-linked securities.
The fund aims to raise £1 billion from institutional investors to support its mission, with initial contributions from Barclays, the London Stock Exchange Group, Mastercard, and NatWest to facilitate operations.
In addition to funding, the Fintech Growth Fund will offer strategic assistance to its portfolio companies, helping them achieve their business objectives while providing access to expertise from the fintech, venture capital, and broader financial services sectors.
Peel Hunt, acting as an advisor to the fund, highlighted that although the UK fintech sector is appealing, many entrepreneurs opt to sell rather than grow their businesses. “We believe that we are only in the nascent stages of the fintech revolution, and that over the next decade fintech as a sector will gain a meaningful weight in the FTSE 100,” the firm stated in a research note. They emphasized that the fund’s role would be crucial in maintaining the UK’s position as Europe’s fintech leader.
The executive team of UK FinTech Growth Partners includes notable figures such as Angel Issa, former global head of corporate development & strategic investments at Nomura; Joe Parkin, former head of banks and digital channels at BlackRock; Kaushalya Somasundaram, who previously led payments and partnerships at Square; and Phil Vidler, CEO of FinTech Alliance.
The fund is currently looking to fill several positions, including regional roles, as part of its strategy to support businesses across the UK. An advisory board, chaired by former Chancellor of the Exchequer Lord Philip Hammond, will feature a distinguished panel of fintech founders and industry leaders.
Phil Vidler, managing partner, remarked: “The UK has always been at the forefront of innovation in fintech, but there is a well-documented growth funding gap. The FinTech Growth Fund aims to address the lack of available growth capital by offering a pioneering domestic, growth-stage, fintech-focused venture capital fund backed by strategic investors. Our goal is not only to provide the necessary capital for founders to scale their businesses but also to engage with stakeholders nationwide to strengthen the broader ecosystem. By doing so, we believe we can ensure the UK remains a global leader in fintech.”