London cannot continue to measure the success of fintech unicorns

Just weeks ago Jeremy Hunt called the UK the “Unicorn Kingdom”, but the companies valued at over £1bn in fintech are no longer the measure of our success, writes Jack Davies.

After a decade dominated by UK fintech unicorns, London risks being left behind by new growth opportunities. Over the past few months, we have heard anecdote after anecdote about money leaving our shores for foreign countries. These stories those of us working in the sector have been hearing every day were quantified by research from SCM Direct, which said the UK’s top 100 companies would be worth almost £500bn more if they listed in New York.

If you look across Europe in 2023 and consider the tech companies avoiding IPOs in London and the stalling performance of fintech stocks, London no longer has the bulletproof sheen it had five years ago. We dominated the fintech space with the kind of nimble regulation our politicians have long advocated in speeches, but we have not been able to replicate that model of success in other areas.

What gets investors excited instead is climate technology innovation – a sector that is mainly based in the Nordics. Compare the rise and rise of Northvolt with the failure of Britishvolt and Bulb. Both had the ability to become leaders in the room, but both were left to falter.

Investors look to space technology – intrinsically linked to climate technology as entrepreneurs look to use satellites to radically improve our ability to track and reduce carbon emissions. While the Satellites Catapult is running training sessions, the European Space Agency is making significant investments in European space technology companies.

Or they see the resurgence of Spain and Portugal as tech hubs. The local talent that left the Iberian Peninsula for London and New York ten years ago are now returning as they realize what is one of the biggest growth opportunities in Europe – technology services and platforms designed to serve the exploding market in Latin America .

If unicorns are the measure of the success of the tech ecosystem, so many people in the sector wouldn’t just be made redundant.

Or their heads have been turned by the resilience of tech investment in Paris, a city that has been able to maintain investment activity over the past 12 months despite the tech slowdown.

Government-backed agencies continue to celebrate the number of unicorns in the UK – a smug habit most recently demonstrated by the Prime Minister’s celebration of our ‘unicorn kingdom’ – seemingly forgetting that unicorns have spent the last 12 months getting hammered by the technological downturn. If these companies are the yardstick by which to measure the success of a tech ecosystem, so many people in the sector shouldn’t just be made redundant.

Unless London begins to look beyond unicorns, and beyond fintech, there is a real risk that the future success of European technology will leave London behind.

All is not lost. Entrepreneurs recognize the shifting sands of technology, and a new generation is emerging with a focus on climate-related innovation. Just as policymakers and ecosystem leaders came together after the financial crash to create an environment conducive to the growth of financial technology, they must do the same now for climate technology and the emerging technologies that will define the next decade.

London was the home of European technology as fintech defined the 2010s. We must move now to realize the opportunities of the next decade.