The growth fund was launched by the London-based investment firm UK FinTech Growth Partners, and is backed by established financial institutions like Mastercard, Barclays, NatWest, the London Stock Exchange Group, and Peel Hunt. The goal of the £1bn fund will be to help fintech companies between their Series B and pre-IPO stage.

The first injection of capital is expected to go out in Q4 of this year, according to UK FinTech Growth Partners, and from there, will undertake four to eight investments per year between £10-100 million. 

The funding scheme comes on the backdrop of significant drops in fintech funding. According to figures from Innovate Finance, the fintech sector raised £2.3bn in the first half of 2023, dropping 37% from that time in 2022. Similarly, the funding in 2022 dropped almost threefold from the same period in 2021. 

As funding in the UK becomes more scarce, local fintech startups struggle to find capital to help them scale domestically — resulting in a loss of IP and a growing divergence between the UK and the US at post-seed funding levels, according to Phil Vidler, managing partner and CEO of FinTech Alliance.

“There is a very clear and well evidenced growth funding gap,” said Vidler.

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“Our aim is to not only provide the capital needed for founders to scale their businesses, but to also engage with stakeholders across the nation to support the wider ecosystem. In doing so, we believe we can ensure the UK remains a global leader in FinTech,” he continued. 

The idea for the new fund was born out of the Kalifa Review, which presented a five-point plan to help the UK become a global leader in financial services through UK FinTech. The review recommended the £1bn growth fund to fill the estimated annual funding gap. 

Sir Ron Kalifa, author of the Kalifa Review said: “The Fund represents another key building block in the support ecosystem for growth stage UK FinTech businesses. This is an important step forward towards ensuring the UK retains its leadership role in FinTech.”