London becomes global leader for fintech HQs

London now boasts more fintech headquarters than any other any city in the world, according to a new report.

Research by Savills and its flexible office specialist Workthere shows that London currently plays host to more than 1,000 global fintech headquarters, ahead of second-placed New York with 939 and third-placed San Francisco with 593.Together, these three cities "are the clear epicentres of the fintech world", according to the report, accounting for a combined total of 38 per cent of global fintech venture capital (VC) investment by volume in the first nine months of the year."London topped the table for the number of fintech VC deals for the first nine months of 2019 with 194, followed by New York at 164 and San Francisco at 123. When assessing deal volume, Workthere found that the rankings changed slightly, with San Francisco on top, followed by London and New York respectively," says Savills."However, fintech investment is by no means limited to these three hubs, with Paris, Berlin, Stockholm, Singapore, Atlanta, Boston, Palo Alto, Sao Paulo, Beijing and Toronto also seeing significant fintech VC activity."

Europe's most popular tech hub

The report points out that London's dominance is reflected in the fact companies such as WorldPay, Finastra, Monzo and TransferWise are among those that have chosen to base themselves in the capital.Indeed, the rise in the UK's position to become Europe's most popular tech hub has exacerbated the demand for overseas talent and has led to repeated demands from the sector for an easing of immigration controls.Last month, a survey revealed that advertised vacancies for IT staff by UK companies surged to more than 165,000 over the third quarter of the year.An analysis of employment and labour data by CompTIA, a trade association for the global technology industry, showed that the number of job postings in Q3 was up 19 per cent over the previous quarter.

The importance of fintech co-working spaces

The Savills report also highlights the need for fast-growing fintech companies to have access to flexible, serviced and co-working spaces, with a significant proportion of the  companies receiving VC funding this year being based in this type of workspace. Cal Lee, global head of Workthere, says, “When comparing flexible office take up with fintech venture capital investment, we are beginning to see a clear relationship between the two emerge for the London market, although this is currently less obvious for New York and San Francisco."This is echoed in the fact that in London, fintech has accounted for 30 per cent of all VC investment over the past five years, compared to 14 per cent for both San Francisco and New York. Therefore, in London, fintech will be a greater driving force of overall flexible office demand.”
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Matthew Fitzgerald, Savills' director of cross-border tenant advisory, adds, “The tech sector as a whole has been a significant driver of conventional office take-up globally for a long time. However, fintech specifically is a relatively young sub-sector consisting of a high portion of startups."As these early-stage companies grow headcount and become more established over the coming years, we expect to see them making the move from flexible to conventional offices and then major occupiers in their own right, as we have seen in London. This journey will support the demand for this type of space, particularly in London, New York and San Francisco.“We also expect fintech companies to fill many senior positions by attracting talent from finance rather than tech, with all the workplace implications that come with it, as knowledge of finance in general and specifics about competitors will be hugely beneficial to some of these growing fintech companies.”The report also compared the average monthly cost for a private office desk within a flexible workspace and found that San Francisco, Stockholm, Toronto, Boston, New York and London are all priced at £700 or higher.

Read more news and views from David Sapsted

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