In conjunction with the Finnish British Chamber of Commerce and Danske Bank, Womble Bond Dickinson (WBD) hosted an "Investing and Fintech" event in London on 2 May. The panel event was well attended by investors, tech companies and advisors alike and lead to some interesting and thought provoking discussions.

The panel was moderated by WBD's UK Head of Financial Services, Jonny Williams and comprised Theo O'Donnell (Head of UK & Ireland at Enfuce Financial Services), Florin Grosu (Co-founder of Traderion and President of the Young Leaders Club), Gareth Genner (Managing Director, Identity and Financial Inclusion at Emergent Technology) and Aapo Bovellan (Founding Partner at Proxy VC).

WBD's Caroline Stevenson, discusses and comments upon some of the main themes below.

Artificial Intelligence

It is predicted that AI technologies will have secured £10 billion of investment by 2020 – and it's clear to see why. The types of solutions coming through in this space are exciting; they're set to change our world completely.

Picture a world where you get to the airport, have your identity verified on entry and then do not need to show any papers again – facial recognition provides you with access to the areas of the airport you need to get to and allows you to board the plane. Now, imagine walking into an event and having a computer greet you by your name and print out your name badge there and then – the computer had looked up your LinkedIn picture and knew exactly who you were. This isn't the future – this technology exists and it's happening now.

It is clear that AI is perceived to be one of the sexy topics in fintech – so much so that Silicon Valley estimates that only around 40% of the companies claiming to be AI companies are actually AI companies. The tricky thing is that there is no easy definition of what an AI company is so many companies are clinging onto the AI coat tails in a bid to secure investment.

The lack of definition is not the only problem – explainability and access to data are both factors that AI companies sweat over. Without relevant data, an AI product can't learn and an AI company has no value if it hasn't learnt anything – a real chicken and egg situation. Once it does learn, even the smartest data scientists can struggle to explain why it does what it does – it just does it. You can imagine that answer when a potential investor asks how the product works! 

Given these factors, it was clear that strategic partners are a favoured means of securing investment. It's vital to have someone embedded who has skin in the game. Collaborative partnerships where, ideally the strategic partner has access to useful data which can be used in the development of the AI solution are vital to the collaboration's success.

That was a theme of the night for all fintech companies – only take on the right money. There's a number of different ways for fintechs to raise capital but they all agreed that:

  1. You should only take on money when you need it.
  2. You must do your diligence to make sure the investor is the right fit for you.


Another key theme was that regulation is often a blocker – it's well known that complex regulation equals less investment. The good news for the UK is that notwithstanding the technicalities of the UK's financial regulatory framework it is still easier (and cheaper) to navigate and comply with than other countries – for example the USA where you have to comply with the individual regulatory framework of each individual state you want to do business in.

It's really important when securing investment that you do so with an investor who understands the regulatory market and requirements. When you become a regulated fintech, there's a number of capital requirements that you must comply with and it's key that an investor understands this. For example, if you want to register as an e-money company, you will have capital requirements of €350,000 – your investor will need to understand that that money can't be touched – it can't be used to develop the business.

It's clear that advisers can play a big role in supporting fintechs through the regulatory minefield – fintech players often don't have time for the protracted discussions and documents that our regulators require. A good working relationship with your advisers can help facilitate this and lessen the burden but this obviously comes at a cost.

What are the top tips for securing investment?

  • Only take on the right type of money and for the right reasons
  • Understand your cashflow
  • Use the right data to avoid any bias embedding in your product
  • Be disruptive
  • Consider collaborative strategic partnerships – incumbent financial institutions are often keen to explore opportunities
  • Use the regulatory sandboxes to help prove your technology
  • And – always have a nice profile pic in case it's used in the future to help you board a plane!

The companies that are set to win in this sector are the companies and the investors that are willing to take risks.

Financial institutions, technology companies, regulators, funds, and insurers turn to WBD for our global and extensive experience and our connections with other fintech savvy law firms around the world. For more information on the topics discussed or to look for advice in relation to fintech, get in touch with the team.