There have been plenty of articles about why London is a great place to set up a FinTech startup but I thought it would be fun to look at it from a different angle. I believe that the whole London startup eco-system can benefit from a strong Fintech sector. The City has the potential to seed a thriving tech scene in much the way that Silicon Valley was seeded by Stanford university, Hewlett Packard and other hardware firms in the middle of last century.
Injection of capital - FinTech startups are more likely to attract capital than any other sector in London. There is a lot of individual wealth in The City as well as institutional investors. This capital is far more likely to be invested in a sector that is easily understood and in startups that solve problems that can be related too. This represents a quick way into the startup scene for City guys who want a piece of the startup action. This new source of capital will gradually spread across other startup sectors as the investors become more confident and want to diversify their risk more broadly.
The redeployment of talent - The City attracts the best talent from across the globe. A small percentage redeployment of these human resources into the startup community will have a huge impact. FinTech is the sector that is most likely to precipitate this effect because it is smaller jump than other types of tech startup. We find that ex City people can make excellent startup founders. They are often extremely well educated and have the necessary drive to build a successful venture. A shift of resources from corporate tech to tech startups will improve the general gene-pool and lead to a greater number of startup success stories.
Fertile source of ideas - FinTech represents a great way for the startup world to add real value. The financial sector is long overdue an overhaul and is dominated by slow moving monolithic players. The banks have a terrible reputation for customer service and can be challenged by disruptive startups that offer a better experience. Startups such as TransferWise, Iwoca, and Nutmeg are already having an impact and there are many more to follow.
In summary, we all know that startups generally thrive in clusters. These clusters need access to resources such as human talent, capital and physical infra-structure. The City of London is ideally placed to provide all of these to a vibrant tech scene that has grown-up right on the doorstep of the financial sector. This should be encouraged and can only lead to continued success.
Blog by Paul Dowling – Co-Founder of Dreamstake the world’s first tech startup platform to match founders with the most appropriate investors using a unique startup rating system. This allows entrepreneurs and investors to monitor startup progress and inject capital and support when most needed. Startup founders can create profiles on the platform and get direct introductions to investors. We are constantly looking for great early stage tech startups. Investors please contact [email protected]
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