The emergence of a critical funding gap between Series A and Series B is jeopardising the UK's fintech crown. James highlights a worrying trend: a sustained decrease in late-stage funding and Series B conversion rates plummeting by over 50% in the last 5 years - and they are continuing to fall.
He attributes this downturn to the boom in Seed and Series A companies attracting funding over the last decade with little regard to what happens after they raise their first institutional cheque. The journey between Series A and Series B is one of the toughest and companies often find they need more capital and time to enable them to grow in order to attract growth stage investment.
Furthermore, James critiques the siloed nature of the UK's VC market, with venture funds being too stage specific and having insufficient follow-on capital which can often delay the growth of deserving fintech companies.
Despite these challenges, the UK's competitive advantages — its legal system, education, and financial climate — continue to attract significant investments. The Fintech Growth Fund has emerged as a beacon of hope, aiming to propel companies from Series B to pre-IPO. Yet, James cautions that without targeted support at the Series B stage, the fund may not bridge the existing gap.
In James’ view, the sector’s sustainability hinges on strategic support for Fintechs transitioning from Series A to B, ensuring the UK retains its coveted fintech crown.
You can read the full articles here:
You can also read James’ take on Arm’s IPO in September here: