An influential review of the fintech sector is to recommend the creation of a £1bn fund to fuel investment in fast-growing start-ups.
Commissioned by the chancellor, Rishi Sunak, the review has looked at ways to ensure the industry, estimated to be worth £7bn and employing 60,000 people, can propser and benefit from any regulatory changes after Britain’s exit from the EU.
While Britain has been a hub for fintech innovation – producing challenger banks such as Monzo and Starling – Brexit could pose a threat because the sector has often hired talent from the EU.
The review, due to be submitted in February, is believed to recommend establishing a “ladder of finance” from the earliest stage of seed capital for start-ups to helping companies big enough to float.
The £1bn fintech growth fund would be owned by institutional investors and could hold shares in a company even after it lists. The report will recommend that ministers encourage investors to create the vehicle, although it would not require any taxpayer funds. In this way it would differ from British Patient Capital, which was launched in 2018 and involves private-sector money being invested alongside government funds.
It would complement the Business Growth Fund created in the wake of the banking crisis and backed by the high street banks.
The fund would not only address the financing gap affecting some companies but would also help keep them in Britain and eventually guide them towards listing in London.
The report will also recommend that the amount of a company that must be sold to outside investors when listing be reduced from 25% to 10%, and endorses the idea of dual-class share structures, favoured by entrepreneurs as they can retain more control.
(source: Sunday Times)