The UK government has set up a £375 million fund for cutting-edge UK tech firms

Two weeks after announcements were made that Germany had created an initiative with a $12 billion fund in a bid to accelerate the growth of start-ups in the technology sector.

As announced on Tuesday, the future fund scheme will watch the Treasury co-invest with private enterprise in an effort to make the UK the powerheads of science.

This comes after the news that the UK FinTech sector hits the multibillion-pound peak of investor interest.  For example, the Banking app Revolut has been valued at £24billion while Wise, the forex transfer business formerly known as TransferWise, has listed at nearly £9bn.

However, Fintech start-up’s will only be eligible for Rishi Sunak’s £375m Future Fund, providing their technology is genuinely at the cutting edge of R&D for example, artificial intelligence. Revolut’s recent funding round is a huge demonstration of an increase in interest for FinTech firms from the private sector.

“I’m very positive that we will see additional and similar success stories in the UK coming down the track,” comments Janine Hirt, chief executive of the UK’s fintech lobby group Innovate Finance.

The UK is currently second in position to the US when it comes to attracting a huge amount of international investment. This is hugely down to London’s strong skills in the financial sector, as said by Hirt.

Prior to Revolut’s funding round was announced, UK fintech firms had attracted $5.7bn worth of venture capital investments through 317 deals in the first half of the year. This broke the $4.6bn record set in full-year 2019 by about 26%.

Alon Kuperman, an executive director at venture capital firm and Revolut investor GP Bullhound and Hirt have said the UK’s access to top tier universities, a diverse talent pool, and strong support from regulators and government is what has attracted entrepreneurs from all over the world.

Wise and Revolut’s success began when it tackled foreign currency exchange as an issue that concerned foreign nationals including the founders of both companies. This mean’s the driving force for investors is problem-solving based on rich and diverse experiences. Additionally, London holds a large ground for financial talent.

Although, it is more difficult for entrepreneurs to move to the UK due to Brexit. However, groups such as Innovate Finance are advocating for a ‘scale-up visa’ designed for growing firms to hire highly skilled staff from overseas.

The Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority have boosted competition throughout the financial services in the wake of the 2008 banking crash, to stall the wave of mergers and acquisitions that intensified risk across a few lenders.

Early-stage companies are encouraged to test out their products for a limited number of customers before the firms are licenced, all whilst being supervised by the regulator.

This move has got entrepreneurs and investors holding hope that the UK government secures greater access to international markets for UK fintech firms. A glimpse into post-Brexit EU, with the promise of making it easier for UK firms to go global!

With leading countries in Tech going head-to-head following huge investments, who has got the most promising prospects?