Brexit Interrupts London as Fintech Hub
A month ago, if I asked a fintech aficionado in Europe where the prime location to start a new company would be, the answer would have been clear - London. But entrepreneurs now have their heads spinning due to the Brexit fiasco.
Not only has London been Europe’s financial centre, it has also been attractive for fintech entrepreneurs establishing new ventures. This, due to enthusiastic government support, age tested banking systems and a sophisticated human workforce. In an article written by Reuters: Reuters - Uk - Britain - Eu - Fintech statistics show that out of 10 fintech organizations, 7 stated that moving their headquarters out of London has been their main topic of discussion. Eileen Burbidge, a partner at venture capital firm Passion Capital was recorded in the same article saying that there seems to be no contingency plan from the British government to re-instil their faith in the fintech sector. This statement should come as a shock to the British economy, as London’s start-ups showed earnings of $7billion in revenue, beating California and New York in the race for the world’s largest fintech hub.
But with the faith of fintech organizations and their investors in London decreasing, what other start-up city alternatives are there? With London dropping from the radar, we believe these five cities will be the next go-to locations for your successful start-up.
I bet you didn’t know that some of the world’s most innovative products are coming from this buzzing German city. According to this article: How Berlin can become Europe’s next fintech hub. In 2015 Berlin hosted the fastest growing start-ups ecosystem in the world, receiving more venture capital investments than any other European city. World renowned Start-ups like Soundcloud, Delivery Hero, Kreditech & Zenkap are already reaping the rewards of Berlins Fintech environment. The city’s cost of living is a major plus for start-up’s as the city recorded a 43% lower living cost than in London. For start-up employees and businesses that have to pay their salaries on a small budget, it all adds together. The Berlin government has also put processes in place to encourage the forming of start-ups as stream line process rather than a lengthy procedure. Berlin’s strength lies in its attitude to rejuvenate itself as a city with fresh ideas and innovative technology, sealing itself as the number 1 city for fintechs to move to in 2016.
Renowned fintech organizations include the unicorn called “Adyen” which is a multi channel payment start-up, well over the 2 Billion euro evaluation, and major banks like ING and Robobank. Also, the Dutch government offers tax-efficient structures making it extremely attractive for start-ups to establish themselves in a city like Amsterdam. Furthermore, it is known for their leading-edge technology around the new hype of cryptocurrencies like bitcoin for example. Put Amsterdam near the top of your Fintech city list.
Hong Kong, China
As it stands Hong Kong has set up initiatives via two organizations namely: The Steering Group of Hong Kong Technologies and Invest Hong Kong committee, to identify innovative and upcoming fintech start-ups in London and New York in order to introduce them to the Asian market. Hong Kong already has 600 million digital banking customers within a 5-hour radius of the city. By 2030 that figure is said to rise to about 2,4 billion. Hong Kong can back these statistics by indicating that out of a total of 1558 start-ups, 86 fintechs were fully operational by the end of 2015. Hong Kong’s main attraction is its positioning as a gateway to the wider Chinese market. Creating space for foreign fintech investors to enter the greater Chinese industry can prove incremental value for emerging markets.
When you go to Switzerland you can feel the impact of start-ups, specifically, fintech start-ups on the environment around them in a positive manner. Swiss citizens are exposed to and trial these great start up “ideas” with little persuasion, possibly due to the amount of great products they are experienced to. See a list of the top 30 Swiss Fintech companies here: Top 30 Fintech companies.
End to end alternative investment platforms like Fundbase, listed in the article above is just one of the many Swiss fintech organizations to take the industry by storm. Fundbase has been a part of the fintech revolution whereby investment professionals are intrigued by a sophisticated platform that leads the entire investment process, from sourcing all the way through testing portfolios and investing. Switzerland’s strong data protection laws, tax regime and political neutrality prove to be extremely attractive to foreign investors. Sceptics argue that Switzerland is lagging compared to New York and Hong Kong due to a lack of government support, but not according to this article discussing Swiss deregulation of blockchain start-ups. The Swiss government has loosened the reigns and allowed start-ups to find themselves in a great position of change and growth.
Existing tech startups include Skype, Spotify and Minecraft as well as hundreds more. Sweden compiles 18% of the European fintech investment rounds. In Sweden 15 Fintech deals amounted to $266 million in investments. Stockholm-Sweden-Fintech-numbers. Leading cryptocurrency start-up KnCMiner brought in a substantial chunk of the investment contributions. If you are looking to find the fintech centre whilst milling around Sweden, then make your way to Kista science park which is the heart of the Swedish fintech hub.
So, to our fellow British fintech enthusiasts and the rest of us, it’s clear that even though London was a shining star, we need to remember that different cities bring upon new challenges. One thing we as start-up devotees understand is that with new challenges also come new opportunities, because without reach there is no growth. Europe’s abundance of influential cities gives start-up companies much to anticipate.