This week’s Economist has a very good special report on financial technology (fintech) startups. I jumped on this particular bandwagon last month when I opened a high-risk savings account with Nutmeg, one of the UK darlings of the industry (already down by 2.31% – thanks Nutmeg algorithm).
One of the things that struck me from the report is a chart that shows how investment in the sector is growing and who is doing the investing. What’s not surprising is the growth in investment. What is surprising, or at least slightly annoying for a Londoner and startup enthusiast, is that 75% of the investment is coming from the US.
London was the world’s biggest city when capitalism and modern finance was invented. Ever since it’s been one of the most important financial hubs on the globe, second only to New York. But even with all that cash slushing around in its capital’s coffers, the UK is light years behind the US in fintech investments. When TransferWise, another London based fintech startup (and a graduate from Seedcamp, I should add) raised a whopping $58M in investment to disrupt the money transfer industry, the investment round was lead by a Silicon Valley based firm.
Let’s hope that next time the Economist does a special report on the sector the London financial community will have joined me in jumping aboard the fintech ship, and will stop punching below its weight when it comes to investing in the sector’s startups. Even though it’s a much higher risk investment than my modest and as of yet unsuccessful Nutmeg portfolio, the returns it could bring would help secure London’s position as an important financial centre in the 21st century. London can not only afford it, it cannot afford not to.