The announcement comes as part of the plan to boost productivity in the UK, which is being promoted by business minister Sajid Javid and chancellor George Osborne.
Javid said: “Productivity isn’t just some obscure measure, of interest only to economists. It matters to each and every one of us. If we could match USA for productivity, it would boost our GDP by 31 per cent – that’s equivalent to £21,000 a year for every household in the UK.”
Read more on productivity:
- Boosting UK productivity: Government pledges “world-class digital infrastructure”
- There’s no point in having a Ferrari if your staff are catching the bus
- Sajid Javid: International students should study then leave the UK
But with the economy in mind, Eileen Burbidge has been named as the government’s special envoy of fintech by Osborne – a role that will require the venture capitalist to “champion” the sector across Britain and also overseas.
Burbidge, a partner at early stage VC firm Passion Capital – investor in Adzuna, DueDil and Urban Massage – is acting as a mentor to youngsters this summer, working alongside Shazam for a scheme that will encourage and motivate budding teenage entrepreneurs. And in May she witnessed Passion secure a £17.5m investment from the British Business Bank.
Of course, Osborne’s appointment of Burbidge may seem like a corporate curveball, but it’s actually not all that surprising.
She is already in cahoots with politicians, serving as a tech ambassador for London mayor Boris Johnson and regularly comments on the latest market developments, thus her new role will extend the existing commitments.
A July report from Johnson’s promotional company London and Partners found that VC investment in the British tech sector was at a record high with almost $1.5bn raised in the first six months of the year.
Taking a closer look at the investments made, the burgeoning fintech sector in London was hailed as a catalyst behind the fundraising and accounted for 40 per cent of the total raised in the capital with $472m secured.
Companies including Funding Circle were among the businesses recognised for helping to drive the sector ahead. Indeed, the P2P small business lender raised a massive $150m in April 2015 – the fifth largest venture capital investment in British history – which followed on from a $65m round in July 2014.
Talking to Real Business after the most recent investment, Funding Circle CEO Samir Desai said: “It’s worth noting that we actually still have the vast majority of funds on our balance sheet from our last round. Whilst we did not need the additional capital, the opportunity to bring on some of the most sophisticated and largest investors in the world was too good to pass up – our backers collectively manage over $5tn.”
Fintech services like Funding Circle are exactly the type of companies Osborne will likely expect Burbidge to target, given that its business model supports Britain’s SMEs, which will in turn support the British economy.
The government claims the move is about “restoring the financial services sector to a path of positive but sustainable productivity growth”.
The target is to make the UK’s space the best regulated globally in the next five years, boasting the highest conduct standards and the country leading the way forward for the fintech industry worldwide, with Burbidge at the centre.
It will result in “more competition, more innovation and more choice for consumers” according to the government report, with “more high quality jobs in finance across the UK”.
Commenting on the success of the London tech market, Burbidge said: “Last year it took London tech firms nine months to reach the billion dollar mark, this year they’ve done it in six months.
“The city has become such a tech powerhouse because it excels over other tech hubs around the world. London combines the technology and digital innovation of Silicon Valley with the Wall Street financing heritage of New York and the policy making of Washington DC – all in one phenomenal city.
“London is one of the most electrifying tech hubs in the world, with companies and investors all brought here by the city’s ideas and entrepreneurial spirit, as well as its talent and access to markets.”
The government has also promised an “international fintech benchmarking exercise” which will take place in autumn in a bid to determine how the UK ranks against international rivals.