Lisa Jacobs, chief executive of Funding Circle and speaker at this year’s London Tech Week, discusses the funding gap for scaleup stage tech businesses in the UK and the role of financial regulation in addressing it.
Is enough being done to address the UK scaleup funding gap?
The UK has an established reputation as a launchpad for startups and a rich history of cultivating successful technology businesses.
Our thriving tech ecosystem is a national asset, but its continued success hinges on ensuring these innovative companies can scale effectively within the UK, whether through private or public markets.
Targeted policies are essential to fuel this growth – both in ensuring funding but also broader policies to foster further innovation and attract top-tier talent.
When it comes to funding, we have a strong venture capital ecosystem already in place in London and the government’s Mansion House reforms and extension of EIS show a promising start to unlocking patient capital for growth businesses.
That said, funding is worthless unless we also have the broader ingredients there to make the UK a great place for innovation and to attract top tier talent so that we can have businesses start and stay in the UK.
At Funding Circle, we provide finance to SMEs – not scaleups – but the backbone of the UK economy who account for 99.8% of businesses, 60% of employment, and 48% of private sector turnover. Here, too, we note that access to finance can be a barrier to growth.
This is precisely where fintech lenders and alternative finance platforms play a pivotal role. By offering streamlined digital channels and efficient processes, we empower SMEs with rapid access to capital, bridging the gap left by conventional routes.
The impact is tangible: in 2024 alone, lending through Funding Circle supported over 87,000 jobs, contributed £7.2bn to UK GDP, generated £2bn in tax receipts, and reached businesses in every one of the nation’s 650 constituencies. Supporting a diverse and accessible funding landscape is key to SME success, and by extension, the UK’s economic vitality.
The British Business Bank through the Growth Guarantee Scheme has played a vital role in making SME finance available over recent years by encouraging lenders to support viable businesses by sharing lending risk.
Extending the scheme beyond its current March 2026 expiration date would provide long-term certainty and confidence for both lenders investing in platform capabilities and SMEs planning for the future.
What sectors of tech should investors be paying more attention to?
The UK has a thriving technology environment, but there are some areas where we are world-leading, such as fintech and biotech.
In Fintech, we have a natural advantage thanks to a combination of a deep pipeline of talent, regulatory and political support (e.g., through the FCA’s sandbox) a growing number of innovation hubs and – in London – access to one of the world’s most developed financial ecosystems.
The maturity of the UK fintech market makes it an attractive proposition, and over the course of the last twenty years or so, we have spawned some great fintechs – Wise, Revolut, Monzo and Funding Circle – to name a few.
What is more, these businesses deliver real value for customers and growth in the real economy.
Funding Circle exemplifies the innovation that has made UK fintech a success story by combining technology and data to build superior experiences and products for our customers.
Fintech should continue to be a focus area as an innovative industry in its own right, but also one that drives further benefits to consumers and businesses across the country.
Are there any areas of financial regulation that need reworking?
At almost 15 years old, Funding Circle has been out of the startup environment for a while.
However, we believe strongly that a thriving start-up environment is important for the economy and growth and that the UK risks losing out to other countries that are focused on this area.
We need to ensure that the UK remains an attractive place to start and grow a business – that means internationally competitive tax schemes that support investment in startups – whether through EIS or employee share schemes such as EMI; alongside a policy environment that encourages innovation and incentives that are attractive to internationally mobile talent.
Financial regulation needs to be seen alongside broader policy support. We encourage policy makers to think fintech first.
Today, fintechs originate more loans to SMEs than the clearing banks, so a fintech first approach is vital rather than a nice to have to ensure effective policy implementation.
In other technology industries, a tech first approach is vital to ensure the long-term success of the technology sector but also the country’s economic growth.
You can watch Jacobs’ panel, The View from the CEO; Critical Tech Investment Decisions Required Today to Remain Relevant Tomorrow, at London Tech Week on Tuesday 10 June at 11:30 on the main stage.
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