Brexit breeds opportunities for UK fintech


Far from being an economic disaster, a British exit from Europe could be the best thing that’s ever happened to UK fintech, says Michael Jackson, partner at Mangrove Capital and former COO at Skype. Great entrepreneurs feed off of disruption – whether geopolitical or technological.

As a venture capital investor, I back entrepreneurs who take advantage of change to create transformational businesses. So I was struck by how vocal London’s tech investors and entrepreneurs were in backing the Remain camp in the referendum. I was also surprised by their reaction to the outcome – one of disbelief and fear. It seemed remarkably risk averse for a group of people that are praised and rewarded for their dynamism. After all it’s the same people that preach about the unstoppable force of change and that profit from disruption. Why aren’t they embracing change and seeing the incredible opportunity that it presents?

Let’s examine their concerns. First is the belief that a Brexit hinders investment and hold companies back. Now it’s possible that an investor is worried about the uncertainty but to think that a risk investor will decline the opportunity to have a stake in a great business in a turbulent environment is absurd. Berlin or Tel Aviv may come into focus but come with their own issues. They may of course be less inclined to gamble on a mediocre business whose path to profitability depends entirely on EU membership but these are surely the exception. I also struggle to comprehend why a bank with fewer employees in London would be less likely to invest in or acquire a meaningful London fintech business – another theory I’ve seen touted – or why a listing on the London Stock exchange is less likely this week than last. Great businesses will always get the funding they need; Skype, Google and others were created in the midst of the dotcom crash. Indeed from my company’s perspective (our office is in Luxembourg), UK businesses just got 15 per cent cheaper.

Regulatory and legal hurdles are cited as another major concern – the theory being that our access to European markets will diminish and startups will be faced with an additional or more fragmented regulatory framework to overcome.

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Posted July 6, 2016 by & filed under FinTech, News.