Only weeks ago, Jeremy Hunt called the UK the ‘Unicorn Kingdom’, but the firms valued at over £1bn in fintech are no longer the measure of our success, writes Jack Davies.
After a decade dominated by British fintech unicorns, London risks being left behind by new growth opportunities. Over the last few months we have heard anecdote after anecdote of money leaving our shores for overseas. These stories those of us who work in the sector have heard every day was quantified by research by SCM Direct, which said Britain’s top 100 companies would, collectively, be worth almost £500bn more if they listed in New York.
If you look across Europe in 2023 and consider the tech companies avoiding IPOs in London and the stalling performance of fintech stocks, London no longer has the bulletproof sheen it held five years ago. We dominated the fintech space with the kind of nimble regulation our politicians have long championed in speeches, but we have failed to replicate that model of success for other areas.
Instead, what’s getting investors excited is climate tech innovation – a sector based primarily in the Nordics. Compare the rise and rise of Northvolt to the failure of Britishvolt and Bulb. Both had the ability to be become leaders in the space, but both were left to languish.
Investors are looking to space tech – intrinsically linked to climate tech as entrepreneurs look to use satellites to radically improve our ability to track and reduce carbon emissions. Whilst the Satellites Catapult is running training sessions, the European Space Agency is making significant investments into European space tech companies.
Or they are looking at the resurgence of Spain and Portugal as tech hubs. The local talent that left the Iberian peninsula for London and New York ten years ago is now returning as they realise what is one of the single biggest growth opportunities in Europe – tech services and platforms designed to serve the exploding market in Latin America.
If unicorns are the metric of the success of the tech ecosystem, sure so many people in the sector would not have just been made redundant.
Or their heads have been turned by the resilience of tech investment in Paris, a city that has been able to maintain investment activity in the last 12 months despite the tech downturn.
Government-backed agencies continue to celebrate the number of unicorns in the UK – a complacent habit most recently demonstrated by the prime minister’s celebration of our “unicorn kingdom” – apparently forgetting that unicorns have spent the last 12 months being hammered by the tech downturn. If these companies are the metric by which we measure the success of a tech ecosystem, surely so many people in the sector shouldn’t have just been made redundant.
Unless London starts looking beyond unicorns, and beyond fintech, there is a real risk that the future success of European tech leaves London behind.
All is not lost. Entrepreneurs are recognising the changing sands in tech and there is a new generation emerging focused on climate-related innovation. In the same way that policymakers and ecosystem leaders came together after the financial crash to create an environment conducive to the growth of financial technology, they need to do the same now for climate tech and the new technologies that will define the next decade.
London was the home of European tech when fintech defined the 2010s. We need to move now to realise the opportunities of the next decade.