{"id":4781,"date":"2017-08-21T09:13:42","date_gmt":"2017-08-21T08:13:42","guid":{"rendered":"https:\/\/www.seedrs.com\/learn\/?p=4781"},"modified":"2021-05-13T22:27:41","modified_gmt":"2021-05-13T21:27:41","slug":"fintechs-interesting-to-investors","status":"publish","type":"post","link":"https:\/\/europe.republic.com\/insights\/investing-features-insight\/fintechs-interesting-to-investors","title":{"rendered":"Fintechs: why do investors find them so interesting?"},"content":{"rendered":"

The UK is\u00a0home to four fintech \u2018unicorns\u2019<\/a> (companies that are valued at least a billion dollars). They have a total valuation in excess of $18.5bn. So you\u2019d be right to assume that investors are still showing a lot of interest in fintechs. Although interest in UK fintech companies waned in\u00a02016, it resurged in Q1 of 2017, with a total investment of $328m<\/a>.<\/p>\n

Seedrs, recently featured on the coveted FinTech50 2017<\/a> list, has played a part in the success of the UK fintech scene. It’s helping to raise investment for leading fintechs, such as:<\/p>\n

Revolut<\/strong><\/a><\/h4>\n

Revolut is an online challenger bank designed for people with a global lifestyle. It offers free international money transfers and fee-free global spending \u2013 at the real exchange rate. As part of the company\u2019s \u00a366m Series B they invited customers to invest alongside Index Ventures, Balderton Capital and Ribbit Capital. More than 4,300 users invested in the round.<\/p>\n

Landbay<\/strong><\/a><\/h4>\n

Landbay is a leading peer-to-peer lending platform for residential buy-to-let mortgages, matching investors with borrowers. With strategic partners and investors Zoopla on board, the company is poised for continued success in the p2p space. To date, they\u2019ve raised almost \u00a35\u00a0million on Seedrs over their nine rounds.<\/p>\n

WeSwap<\/strong><\/a><\/h4>\n

The world\u2019s first peer-to-peer travel money exchange platform has raised \u00a33.5 million on Seedrs. With just under 3,000 investors (including Andy Murray), the company has broke the record for the highest number of investors for an independent business fundraising on a UK equity crowdfunding platform in 2016.<\/p>\n

Wealthify<\/strong><\/a><\/h4>\n

And it\u2019s not just happening in London \u2013 Wealthify is the easy-to-use online investment service based in Cardiff. Using advances in digital technology, it automates and simplifies investing. The company \u00a0has already raised almost \u00a31,8 million on Seedrs alone.<\/p>\n

So fintechs aren\u2019t just of interest to professional investors, but also the mass affluent, who\u2019re likely to be or become customers and top advocates.\u00a0<\/strong><\/p>\n

Five emerging trends for fintechs<\/strong><\/h4>\n

From the campaigns we\u2019ve seen and our experiences in the finance space, there are a few trends emerging to look-out for over the next year:<\/p>\n

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  1. \n

    Mobile payments could become the norm<\/strong><\/h4>\n<\/li>\n<\/ol>\n

    Many fintech startups are focused on mobile purchasing, banking and currency exchange, such as Revolut, with the aim of making it quicker and cheaper by removing cumbersome middlemen.<\/p>\n

      \n
    1. \n

      Security may be beefed-up<\/strong><\/h4>\n<\/li>\n<\/ol>\n

      ID confirmation of the account holder via fingerprint recognition is already becoming common place via mobile devices. The next wave could be a solution that authorises payments using wearable tech. This could recognise the account holder\u2019s heart beat rate or via images, such as with PixelPin<\/a>.<\/p>\n

        \n
      1. \n

        Blockchain technology could become widely used<\/strong><\/h4>\n<\/li>\n<\/ol>\n

        Not just about trendy and controversial cryptocurrency. Blockchain keeps track of each and every digital exchange of currency, reducing the risk of fraud.\u00a0 More and more blockchain businesses are starting up. There\u2019s even a UK-based \u00a0accelerator focusing on this, called Coinsilium<\/u><\/a>.<\/p>\n

          \n
        1. \n

          Artificial intelligence will really break through <\/strong><\/h4>\n<\/li>\n<\/ol>\n

          AI chatbots like Plum<\/a>\u00a0turn big data into meaningful information for investors and savers. These platforms are leading the way in transparency and customer engagement. \u00a0\u00a0<\/strong><\/p>\n

            \n
          1. \n

            Mainstream financial service providers will partner with challengers<\/strong><\/h4>\n<\/li>\n<\/ol>\n

            Traditional banks will increasingly look to work together with fintechs. Sounds unlikely? It\u2019s already happening. NatWest<\/a>\u00a0and\u00a0<\/u>Royal Bank of Scotland<\/a>\u00a0have already invited us to join their select panel of alternative funding solutions as their equity funding partner in the Capital Connections programme. More high street players will likely look to partner with challengers to fill gaps and evolve their own offerings.<\/p>\n

            \u00a0<\/strong>The\u00a0opportunity for fintechs offered by Brexit<\/strong><\/p>\n

            If Brexit could pour cold water on fintechs, there\u2019s no sign of it happening just yet \u2013 on either side of the channel, according to KPMG<\/a>.<\/p>\n

            Investors based in mainland Europe invested $212 million<\/a>\u00a0into UK fintechs in the first quarter of 2017. And UK investors put $428 million<\/a>\u00a0into fintech startups based in continental Europe. Brexit certainly doesn\u2019t seem to be affecting Seedrs so far, with plenty of opportunities for investors on both the continent and the UK.<\/p>\n

            Although there\u2019s uncertainty about what Brexit means for the fintech sector, many believe it could actually help the UK drive the next stage of financial innovation. After all, unlike traditional banks with their physical presence, fintech startups aren\u2019t usually constrained by geographical borders because they\u2019re online. What\u2019s more, growth areas such as virtual currencies, blockchain and P2P lending are not covered by EU directives. So they won\u2019t be affected by the loss of passporting (the right for a firm in the European Economic Area to do business in any other EEA state without further authorisation).<\/p>\n

            A positive impact?<\/h4>\n

            The UK has spent decades building up a welcoming regulatory environment, especially for fintech. So although Brexit could lead to financial regulation changes, many don\u2019t expect it to have a negative impact on financial startups. Some even think it could have a positive impact with all sorts of possibilities, including:<\/a><\/p>\n