Fintech sector voices concern over future funding
Digital Finance Forum survey suggests startups are in for tough times when the government support schemes end in October
Almost half of UK-based fintech founders believe the COVID-19 pandemic will make it harder to raise finances in the next year.
The limited access to capital is seen as the most pressing challenge to the industry, according to a survey by the Digital Finance Forum (DFF).
It comes as the UK, which recently entered a recession, braces itself for potential job crisis, with the government's support packages for businesses also being rolled back.
Some three-quarters of respondents were positive about how the government has supported the economy so far, with half taking advantage of schemes such as the Future Fund and 61% also tapping into the furlough scheme which ends in October.
Signs of financial troubles are already upon some fintech startups, as a fifth surveyed by the DFF used the government's bounce back loans. Under that scheme, SMBs can borrow up to a quarter of their annual turnover, which is capped at £50,000.
However, in April, research from Plexal suggested that many startups were in financial trouble, despite the Future Fund. According to the DFF survey, 37% of fintech founders had sought a bank load but were not able to qualify for one.
The pandemic has seemingly impacted every industry and even the biggest of fintech firms have not managed to avoid it. In July, Monzo reported that its losses had tripled for the year and warned it might not be able to continue to grow.
"The UK's Fintech companies have a huge role to play in helping to drive our economic recovery, and in many respects, the sector is just getting started," said Christian Faes, chair of DFF and co-founder of LendInvest. "Even more reason for the government to support the sector to ensure we remain a world leader."
The UK's government has recently launched an independent fintech review to consider how it can continue to grow and maintain an ecosystem that supports growing firms across financial services.
"Digital Finance Forum's results reinforce my commitment to ensuring the UK's pre-eminence as a place for fintechs to do business," said John Glen MP and economic secretary to the Treasury.
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