For any financial journalist based in London, few days are more filled with excitement than budget day. In the run up, comes the deluge of hopeful messages from vested interests, all making the case for special treatment from the Chancellor – the person most countries call their minister of finance – over favourable tax treatment or other subsidies.
Then the actual speech, usually long on propaganda, sometimes delivers intriguing nitty-gritty financial detail to chew over while we all pretend to care about more important things than duty on beer and wine.
Finally, the table thumping as the vested interests moan that they got nothing.
SoftBank’s decision to relist Arm Holdings in New York instead of London casts a long and dark shadow
On March 6, Jeremy Hunt was desperate to pretend that Brexit has not diverted investment away from the UK. He talked up the UK as a technology centre: double the artificial intelligence startups of anywhere else in Europe; double the venture-capital investment; a tech economy now double the size of Germany and three times the size of France.
“We are on track to become the world’s next Silicon Valley,” Hunt proclaimed. “I want our brilliant technology entrepreneurs not just to start here but to stay here, including when the time comes for a stock-market listing.”
SoftBank’s decision to relist Arm Holdings in New York instead of London casts a long and dark shadow.
Ryta Zasiekina, founder and co-chief executive of fintech company Concryt, damned all this with the faintest of praise: “While Hunt's ambitions to attract more investment are commendable, the reality on the ground reveals a different picture. Despite the availability of early-stage funding, scaling up remains a challenge for tech startups in Britain, often prompting them to seek investment from the US and even relocate their businesses.”
Perfect example
The UK can still boast a vibrant fintech industry. Indeed, only the day before Hunt’s budget speech, Monzo, the UK challenger bank established in 2015 and launched the following year after a £1 million crowd-funding campaign, reported a £4 billion post-money valuation after its latest Series I £340 million funding round.
Monzo now has nine million customers, one in seven UK adults, adding more than two million in the last year, with minimal marketing spend.
It would seem to be the perfect example for Hunt’s claim that the UK is the next Silicon Valley. But he passed up the chance to ride on the news.
Might that be because he once complained to the Financial Times that he had been turned down for a Monzo card? Or could it be because the leading new investor, committing heavily to Monzo while other fintechs struggle to raise cash, is CapitalG, an independent growth fund with one limited partner: Alphabet.
CapitalG states: “We believe Monzo can be the first new entrant to reach the size of the established legacy UK banks.”
But what is it going to do with proceeds?
CapitalG confirms the widespread view that Monzo will have another crack at a bigger prize than its home market. It will try and work its “Monzo magic” on US customers.