In 2016, a group of fintech founders — including Nikolay Storonsky founder Revolut, finance marketplace LendInvest cofounder Christian Faes and Freddy Kelly, founder of the Apple-acquired open banking startup Credit Kudos — began to meet on a bimonthly basis for dinner.
Those initial supper club meetings formed the basis of Fintech Founders, a group that’s become a backbone of the UK fintech community, with over 350 founders among its members. Its proponents say that it’s created a closer community of entrepreneurs building companies in one of the UK’s most successful tech sectors, and help keep these high-growth companies top of mind for UK policymakers.
But, as an exclusive, invite-only network that’s enabled lobbying access to the highest levels of the UK government, some say Fintech Founders worsened gender inequality and elitism in the sector.
So, how did this influential group grow to where it is today, and is it really a force for good in UK tech?
A safe space
Fintech Founders’ initial meetings were shepherded by Faes, he says in an interview with Sifted.
Its founding members were united by a desire to have a so-called “safe space” — away from the circus of fintech conferences — where they could speak frankly. They’d trade advice on investor term sheets, lawyer recommendations and even guidance on applications with the regulators.
“A lot of founders would get on stage, read a corporate script and then we’d go off. We wouldn’t necessarily get a huge amount out of it,” recalls Faes.
In 2018, Fintech Founders moved closer into the orbit of the UK government turn when Nick King, former chief of staff to ex-Chancellor Sajid Javid and founder of consultancy firm Henham Strategy, was brought in by Faes.
In its eight-year history, it’s helped its members secure meetings with Nikhil Rathi, chief executive of the UK regulator the Financial Conduct Authority, as well as former economic secretary John Glen. These roundtables were opportunities for fintech founders to feedback on policy and also for lawmakers to learn more about the fintech industry from those working at the heart of it, says Faes.
During his tenure as Chancellor of Exchequer, former prime minister Rishi Sunak also held a drinks reception for the group in February 2022 where he made a speech before acquainting himself with some of its founders.
Henham Strategy operates as the secretariat for the group and has held networking events sponsored by the likes of the London Stock Exchange, Google and wealth management platform Evelyn Partners.
Despite providing a line of communication to the government, King says that lobbying is only part of the group’s purpose and maintains that fostering connections between members is its priority.
Entrepreneurs who are part of the network tell Sifted that it’s not only provided networking opportunities that they’d otherwise have missed out on but also provides community in times of need.
Choppy waters
Central to Fintech Founders is a vibrant WhatsApp group, bustling with over 300 founders sharing advice. This group chat, established during the Covid-19 pandemic, became a lifeline for founders, providing real-time support and camaraderie.
“We held a bunch of calls where everyone would just jump on a call at 4pm and chat,” says Faes. “It was quite therapeutic for founders to just jump on and say ‘yeah I don’t know what to do’”.
During the pandemic, fintechs had to wrestle with a sharp dip in investment funding into the sector, with funding at a three-year low in April 2020.
King also says that another particularly active period was during the breakdown of Silicon Valley Bank, where a run on the institution resulted in a freeze on withdrawals.
It was during this time where the group particularly flexed its lobbying muscles, it says, claiming that it was one of the voices speaking to the UK Treasury on behalf of the fintech community urging swift action “to protect the British innovation and startup ecosystem”.
The crisis was eventually resolved by a flash sale of SVB’s UK arm to HSBC, allowing clients to access funds without significant delays.
Who you know
Faes and King say that most founders hear about the group on a word-of-mouth basis and the events it holds are described as “invitation-only” on its website. That could give the impression that the access and community provided by Fintech Founders are locked to the few who were lucky enough to hear about the group from a fellow founder.
A CEO of a fellow fintech industry group, which spoke anonymously with Sifted, says it’s a shame that invite-only groups exist in the fintech ecosystem as they run the risk of increasing gender inequality.
“Those groups have always existed,” they said. “And it’s unfortunate that society is structured in that way.”
Both heads of Fintech Founders refuted the idea that it was an exclusive network. They note that membership is free and that they’d never decline any founder that wanted to join the group, provided they fit the criteria of being a fintech founder.
King says that a lack of diversity is an “industry-wide problem” and not specific to the network.
And while the group declined to share statistics on the diversity of its members, Faes says that it’s advocated for more minority background founders to join during the events it’s held.
A new government
With the Conservative Party now out of power after 14 years in government, Fintech Founders will have to rely on a new cabinet office to ensure the UK remains a fintech hub, amid questions over whether it could lose its crown to France.
Faes says that it felt as if Brexit and the pandemic took up much of the forefront of the government’s policymaking process in recent years, compared to when David Cameron was in power between 2010 and 2016. He notes how — in that period — the Conservatives brought in the first legislation on crowdfunding and actively promoted the sector.
There are signs that the new administration may see fintech once again come to the forefront. The newly-elected Labour government is expected to announce steps to formally regulate buy-now-pay-later within its first 100 days.
And last Thursday, the Financial Conduct Authority rolled out new rules on IPOs that the UK’s financial regulator sees as “the biggest changes to the listing regime in over three decades” in an attempt to resuscitate its capital markets.
Fintech Founders will likely be keeping a keen eye on the success of these reforms. They will be particularly important to UK fintechs that have made their IPO intentions clear, such as Starling and Zopa Bank.
“The government does give a lot of lip service to fintech,” says Faes. “There just needs to be a bit more substance around it.”
Fintech Founders members who spoke to Sifted say that one of the key uses of the group is the avenue of communication it offers fledgling entrepreneurs to the government.
And if the new UK government does try to follow through on its fintech plans, it’ll likely be relying on the expertise of its members as well as it looks to safeguard the UK’s status as a fintech hub.
It’s just unclear how representative of society that group of invite-only members really is.
Read the orginal article: https://sifted.eu/articles/fintech-founders-uk-government/
