by Shane Donnelly
Updated: Jul 26, 2017 Published: Jul 26, 2017
UK fintechs are receiving more investment now, than they were pre-Brexit – a report by trade body Innovate Finance has revealed.
£433m worth of venture capital investment has been pumped into British tech businesses in the first half of 2017, over half of which came from VCs based outside the UK.
Despite the economic and political uncertainty caused by the UK’s decision to leave the European Union, fintech appear to not only be weathering the storm, but also outperforming pre-Brexit levels of investment.
The UK is now ranked third in the world for fintech investment, just behind the United States and China – with businesses bagging 37% more than they were in the first six months of 2016.
Investment is also 50% up on the second half of last year, in which the shock referendum result triggered shock waves across the UK and wider world.
However, overall levels of funding are still down on 2015 levels -when a record $676m was invested in the first half of the year and over $1.3bn for the entire year.
Concerns also remain over the future of the UK’s fintech workforce, of which its believed 30% are from overseas – and may be required to apply for permanent residency once the UK officially leaves the EU.
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In measure announced by the government last month, EU business owners and employees who have lived in the UK for at least five years will be able to apply for permanent residency or “settled status”.
Should their application be accepted, foreign-born residents can live in the UK for an indefinite period – enjoying the same rights, services and privileges as British-born citizens.
Persons who have arrived in the UK before this ‘cut off point’ but who haven’t been living here for five years can only apply for permanent residency once they have reached the five-year threshold.
Entrepreneurs or workers who arrive in the UK after this ‘cut off point’ will need to apply for UK residency once the UK has left officially left the EU.
Abdul Haseeb Basit, chief financial officer of Innovate Finance, said:
“We saw a period of uncertainty over the summer last year but I would say that by around the third quarter, things were starting to recover.
“Things have slowed but we’ve seen an improving recovery since the referendum last year.
“There is a lot of competition in the investment space – there’s a lot of capital available and it’s looking for good companies to invest in.
“Were they to not invest in UK companies, they feel like they might miss an opportunity. The appetite is still strong.”