cfo newsletter 9

Is a $1bn fintech fund enough? 💷 

Table of contents

Hello and welcome to all CFOs, finance pros and fintech enthusiasts. You might want to bring your umbrella, because in this issue we’re heading to the UK… ☔️

What you need to know right now:

The UK is launching a $1bn fintech fund… but is that enough?

The UK has been a fintech hub for years.

Home to Unicorns like Revolut, Monzo, and, the country has long punched above its weight in an industry dominated by the United States.

That success was supported by three factors:

  1. A deep talent pool, supported by pro-business migration laws and EU membership.
  2. London’s dominant status as a global financial center.
  3. Competent government with an international reputation for thoughtful policymaking.

But things in those three fronts have… changed, to put it mildly. And amid rising interest rates and investor caution, UK fintech investment fell by 57% in the first half of 2023, according to KPMG 📉

Now, though, it seems that help is at hand in the form of the Fintech Growth Fund. Backed by organizations like Mastercard, Barclays, and The London Stock Exchange, the fund will support companies as they seek to grow beyond Series C funding.

Many kinds of companies will be eligible for funding, from consumer-focused challenger banks and payments tech groups to financial infrastructure and regulatory technology firms.

According to CNBC, the venture was created in response to a government-commissioned review that examined whether the U.K.’s listings environment is unattractive for tech firms.

Hint: it is. Even the UK’s most successful tech firms are choosing to list on the New York Stock Exchange rather than in London.

In fact, the London Stock Exchange is affectionately known as “The Dinosaur Zoo”, due to its reputation for hosting old-fashioned blue chip companies and failure to attract tech IPOs and innovation.

It’s easy to understand why investors and startups are turning to smaller markets like Estonia, which offer favorable policies and a competitive pool of engineering talent.

The Fintech Growth Fund is certainly good news for the UK fintech industry, and we’ll be following its investment choices with interest.

But at the risk of making a dated Austin Powers reference… is one billion dollars enough to make a difference in 2023?

What else to read:

Europe’s Stripe rival Adyen saw $20 billion wiped off its value in a single day. Here’s what’s going on. (CNBC)

  • Shares of Adyen plummeted 39% on Thursday, erasing 18 billion euros ($20 billion) from the company’s market capitalization after reporting its slowest revenue growth on record.
  • Concerns that competitors in local markets, particularly in North America, are muscling in with cheaper offerings have heavily weighed on the company’s prospects.
  • Adyen has typically been viewed as a growth stock, after consistently reporting revenue growth of 26% each half-year period since its 2018 stock market debut.

India to expand digital payments with AI-powered voice transactions (FT)

  • India is introducing measures to enable voice-based and offline digital payments, aiming to bridge the gap between urban and rural areas and enhance the country’s digital infrastructure.
  • These initiatives, including conversational payments using AI-based speech recognition and near-field communication for offline transactions, are set to be rolled out in the coming months.
  • The expansion of digital payments faces challenges due to limited internet access and lower literacy rates in rural areas. While the move towards voice-based and offline payments is seen as a step towards inclusion, critics highlight issues such as language diversity and data security concerns as potential hurdles to the success of these initiatives.

Further reading: What global companies can learn from Asian governments about cross-border payments


See you next time for more fintech news and insights,

The Papaya Global Team