How is the UK startup landscape 18 months after the beginning of the pandemic? Despite the challenges, a recent survey shows that businesses turn pretty optimistic about the next 12 months. New funding rounds and positive financial data seem to back this optimistic outlook. Keep reading for more good news!
Weekly FinTech news digest: 3—9 August 2021
HSBC launches a VC strategy to invest in the FinTech sector
The bank aims to take part in Series A and B rounds of European and Asian firms
HSBC Asset Management wants a slice of the FinTech pie, and the newly launched VC strategy is the first step towards establishing investor relationships with innovative companies in this high growth sector. The bank looks to connect with businesses in the B2B software and financial services space in Europe and Asia, focusing primarily on fast developing regions such as the Chinese Greater Bay Area. The new team in HSBC will be led by executives with vast experience in financial operations across Europe and Asia: Remi Bourette, head of venture and growth investments at HSBC and Kara Byun, director of venture and growth investments.
Read more about top investment trends to watch
IFC, a member of the World Bank Group, invests $10m in FintechOS
IFC believes that the startup’s low-code approach can boost financial inclusion around the world
The International Finance Corporation, a sister company of the World Bank and part of the World Bank Group, has joined the $60 million Series B funding round for FintechOS. The London-based startup provides financial institutions with a low-code and self-service platform to create digital products for the unbanked. According to Henrik Bläute, Investment Officer at IFC, “digital financial services are critical to boosting financial inclusion and driving inclusive growth”, which is part of the World Bank’s strategy of supporting financially excluded people all over the world. The service provided by FintechOS is an affordable and easy to implement solution to this problem, accessible also in developing countries. The Series B was led by Draper Esprit, and besides IFC, included investors such as Earlybird Digital East, Gapminder Ventures, LAUNCHub Ventures, and OTB Ventures.
Read more about banking software development
72% of UK startups feel optimistic about the next 12 months
The mood is bullish despite the pandemic’s impact on the business
The past 18 months since the start of the pandemic were without a doubt pretty rough for UK businesses due to the lockdowns and Brexit. However, a recent survey conducted by the Angel Investment Network revealed that despite the obstacles in the past months, three-quarters of 645 UK startups surveyed feel optimistic about the future. Other questions shed light on the difficulties that businesses had to deal with as an outcome of the pandemic: 68% of startups that raised capital in the past year experienced delayed fundraising, and 54% reported that their investors backed out of the planned deals. As a result, raising funds remains the biggest challenge for a staggering 85% of UK startups. Other struggles include product development, recruiting talent, and Covid-related issues.
Read more about the main reasons why FinTech startups fail
Atom Bank achieves monthly operating profit for the first time
The company believes that it will become regularly profitable soon
After a highly successful quarter, Atom Bank announced that it has delivered monthly operating profit for the first time in the company’s eight-year history. The CEO Mark Mullen ensured that after achieving this significant milestone, his company expects to become profitable on a regular basis in the near future. The hope is based on some hard data: at the end of June, Atom exceeded £3bn in mortgage lending, grew deposits to £2.5bn, and reached £759m in CBILS business lending. This resulted in a quarterly income of £9.8m, 30% higher than in the previous period. Moreover, Atom closed a £40m funding round in April, and plans an IPO in 2022.
Read more about digital transformation in banking
Tembo Money closed a £2.5 million funding round
The company, launched in June, helps first-time buyers boost their deposits
The London-based company offers an application helping future homeowners increase their deposits through consumer lending and family support. After a successful launch in June 2021, the FinTech plans to improve its technology and continue its expansion. The £2.5m funding, acquired from Aviva and Fair by Design, a fund managed by Ascension Ventures, will allow Tembo to reach more customers with their offering comprised of mortgages from leading British lenders and two products, called Income Boost and Deposit Boost. The CEO and co-founder Richard Dana of Tembo Money commented that his company’s products can “help turn the tide on the generational wealth gap, by helping families work together to give first-time buyers a fast, affordable way to increase their deposit.”
Read more about lending product development