UK startups get Brexit boost while UK funds suffer

UK startups get Brexit boost while UK funds suffer

Venture capitalists have invested more than $200m in UK tech startups in the month following the controversial Brexit vote, allaying fears that London's growing tech sector would be one of the first casualties of the withdrawal from the European Union.

A report from US-based, not-for-profit research firm Pitchbook has based its figures on 42 investments made in UK tech startups over the last month. The biggest of these deals involved a $65m investment in cyber security firm Darktrace. .
 
The figure is lower than the $338m raised by startups in the same period last year, however the survey only includes VC capital rather than any M&A actvity, therefore excluding the $32bn paid by Japan's SoftBank for UK chip maker ARM.
 
The report has led London mayor Sadiq Khan to talk up London's credentials as a fintech hub. "This investment in the capital shows that London is open for business, open for new ideas and will continue to welcome the best talent from around the world."
 
The UK's National Technology Adviser, Liam Maxwell, has also been promoting the UK's status as a centre for fintech investment and, talking to Finance Magnates magazine, has refuted the fear that other European cities such as Berlin may be better positioned to attract tech startups in a post-Brexit Europe.
 
"Berlin is a great place. Honestly. If they want to go, they can go. I just doubt that they will find all that they are looking for. London has the best conditions for a tech company. The network is still in London. The best people are still in London."
 
The bullishness of Khan and Maxwell is not evidently shared by fintech leaders and investors though. A recent survey into post-Brexit sentiment from UK government-backed Tech City UK reported that the majority of startup leaders and investors belived there is "cause for optimism" in the face of the Brexit decision. However, nearly a quarter of the 1,200 respondents also said they expect to scale back their expansion plans as a result of the Brexit vote.
 
The UK's fund management sector has fared less well than its fintech counterpart. Five of the largest fund managers operating in the UK - Franklin Templeton, Fidelity, Schroders, M&G and Invesco - have suffered serious outflows with investors withdrawing more than €1bn from each of the managers' funds.
 
The data, collected by research firm Morningstar, is the first such report on fund flows to be published since the Brexit vote and confirms the fears expressed by the UK's fund management market of the implications of EU withdrawal.
 
According to Morningstar director Ali Masarwah, who was speaking to the Financial Times, the outflows were "basically the stampede of nervous investors exting these equity funds".  

Comments: (1)

A Finextra member
A Finextra member 25 July, 2016, 15:511 like 1 like

So..... the sky is not falling in on fintech UK Ltd.  Is this yet another example of the doom-mongers predictions failing to live up to their promise?

We all agree, Berlin IS a great city.... to visit.... If you are Berlin Born, its home....

If you are Indian, Asian, Chinese, from the Middle East or the USA, London remains  the go-to location, its sheer multi culturalism means any visitor from anywhere on earth can find somewhere to feel 'at home'.  Its possible to eat here without facing porcine heavy menu's too!

Of course, given time things could get worse for Fintech in the UK. At the moment i dont see much cause for concern...Sanity seems to be breaking out all over - even the French seem to have read the 'Calm Down and Carry On' message... Maybe i am being complacent, but then, I am in Payments, not Funds managment.

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