UK Fintech CEO Says Venture Capital Funding Already Decelerating
Lawrence Wintermeyer, CEO of Innovate Finance, told CNBC that the massive wave of venture capital funding that poured into the fintech sector last year already seems to be scaling back.
“Things in venture capital have slowed into 2017,” he told CNBC at FundForum International in Berlin. “We’re seeing globally more extensions of A-rounds and I think the prognosis is that it might be difficult to top the global numbers of around $16 billion that was done globally last year.”
Per its website, Innovate Finance is an “independent not-for-profit membership association representing the UK’s global FinTech community.” The association has been on high alert since the Brexit referendum last June, as losing ties to the EU and specifically the European Investment Fund (EIF) will lose the finance industry a steady and valuable source of capital.
CNBC reports that between 2011 and 2015, U.K. VC funds received roughly €2.3 billion ($2.6 billion) in contributions from the EIF.
Wintermeyer posited that despite the deceleration, there isn’t cause for panic yet. “People have been sitting on the fence but broadly we have been doing okay,” he tells CNBC.
The bigger concern among innovators in the U.K. fintech industry is the reduced ability to attract premium talent to the capital. Immigration policies and uncertainty over the future of post-Brexit Britain have created an unwelcoming environment for gifted innovators and prospective fintech prodigies.
Wintermeyer stressed the importance of talent from abroad “The most important thing is U.K. remains a magnet for talent…That and attracting capital. Talent and capital are the two most important things in FinTech,” he continued. “Thirty percent of our own fintech founders or CXOs (corporate officers) are non-British and it’s a really important part of making up the community.”
Fintech may be the way forward, but London is still very much a hub for the traditional banking industry. Per CNBC, Wintermeyer thinks the cooperation between the field’s mainstays and incoming innovators is becoming increasingly constructive.
He also discussed the desperate need for innovation across all fronts in order to progress alongside the front-runners of the industry.
“Institutions need to innovate – they really need to get down the costs and change the technology in their legacy stacks and get the compliance cost down,” he tells CNBC. “Innovators want to innovate and institutions are a good source of capital for them, so we are in an unprecedented period of collaboration.”
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