Over £1bn of investment into UK fintechs could be lost because of Covid-19, a new report has revealed.
The joint research from technology membership organisation TechUK and blockchain company Qadre found that 68 per cent of fintech founders have reported missing out on crucial funding rounds because of the pandemic.
The average amount lost by fintech businesses from these missed fundraises is approximately £1.2m.
As the UK is home to over 1,600 fintech companies, it means an estimated £1.4bn of investment could be lost across the industry because of the crisis.
The report also found that fintech founders want to simplify equity management processes to help them better manage their business during the pandemic.
More than two thirds (67 per cent) said they believe equity management is a distraction and that time spent on managing cap tables is better spent on more important tasks.
And 61 per cent believe that time spent on equity management has impaired their ability to deliver a product or scale their business.
“The UK has one of the world’s most successful fintech markets, but company founders are facing unprecedented economic headwinds with Covid-19 at the eye of the storm,” said Nick Williamson, chief executive of Qadre.
“At this time of uncertainty, equity management processes are preventing fintechs from raising money, delivering new services, and growing their business.
“Equity management isn’t just inconvenient, it is damaging UK fintech.
“It has never been more important for fintechs to streamline unnecessary tasks and focus on developing products and services that can help them ride out this storm.”
“At the heart of the fintech industry is the promise of innovation to create financial services that eliminate complexity, provide an intuitive user experience, and create value for consumers and businesses alike,” said Julian David, chief executive of TechUK.
“This report highlights that there is space to replicate this in equity management.
“Fintech organisations must address the need to better support the start-up community to improve efficiency and generate company growth.
“The dearth of solutions that address equity management is often overlooked. This study reveals the impact it can have on wider company success.”