Fintech-government
Fintech-government
Fintech government

Fintech government- UK fintechs are at risk of collapsing during Covid-19 with the majority not receiving help from the government, a survey from trade body Innovate Finance has found.

Smaller fintech firms – defined as those with 25 or fewer employees – are most at risk from the impact of Covid-19. More than 75 per cent of smaller fintech companies are worried about the next funding round, with over 70 per cent of all fintechs having received no private funding since the start of lockdown.

At least three-quarters of smaller fintechs have applied, or intend to apply, for one of the government’s schemes to help prevent their businesses from collapsing amidst the coronavirus crisis.

Over 70 per cent of the fintechs that responded to the Innovate Finance survey said they haven’t received funding during the crisis. For those that have attracted private funding during the crisis, angel investors have been the most common source (10 per cent).

Smaller companies have had an even greater reliance on angels, with half (50 per cent) receiving investment in this way. Other forms of investment included institutional or corporate venture capital (four per cent), venture capital (three per cent), private equity (two per cent) and family offices (two per cent).

Many of the surveyed start-ups flagged that current government funding programmes are unsuitable for early stage fintechs, categorised as pre-seed and seed funding rounds.

The existing government support schemes do not incorporate the EIS/SEIS programmes, which offer tax relief in order to encourage investment in small unlisted companies.

“It’s evident that the fintech sector faces a significant funding gap as a direct result of Covid-19,” said Charlotte Crosswell, chief executive of Innovate Finance.

“We need to act fast before it’s too late. If we fail to address this, we risk losing many companies in the fastest-growing sector in the UK economy – one that has enormous potential to transform every aspect of our lives and underpin the digital future.

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Article Credit: P2P

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