Industry News The Week That Was

ClearScore’s huge FinTech exit and Funding Circle’s £2bn float

Funding Circle's £2bn Float
Harriet Green
Written by Harriet Green

Chancellor Philip Hammond told us on Tuesday that, come his November Budget, we should expect to see the taxation of digital companies, tax increases on single-use plastics (with the money raised being re-routed to incentivising innovation), and potential changes to VAT – but what else has happened this week?


THE ROUNDUP

First off, we saw a huge FinTech exit yesterday: ClearScore is being bought by Experian for £275m. The credit data startup is less than three years old, but has 6m customers in the UK and is expected to see $55m of revenue this year. The price tag means that, for every month it’s been in existence, it’s generated an average £11.4m of value.

Experian will be able to make the most of ClearScore’s free membership model, offering customers paid-for financial products. People have raised eyebrows at the deal – because Experian is such a dominant market player. But there are others, like Equifax and Callcredit, and it’s still subject to regulatory approval.

Is it time to work out how to regulate the internet? It’s the twenty-ninth birthday of the World Wide Web, and Tim Berners-Lee has written an open letter warning of the level of power now held by big tech firms. The creator of the internet said the sheer size of the sector’s major platforms – like Facebook, Amazon, Google – means they have too much control over what we all see and share, that their existence makes it possible for people to “weaponise the web at scale”, and that they are having a deleterious effect on competition and on innovation.

“These dominant platforms are able to lock in their position by creating barriers for competitors… They acquire startup challengers, buy up new innovations and hire the industry’s top talent. Add to this the competitive advantage that their user data gives them and we can expect the next 20 years to be far less innovative than the last.”

Joining those calling for tech titans to be regulated, he said a legal or regulatory framework that “accounts for social objectives” is the way forward.

But what would internet regulation look like? While few people would suggest that self-regulation is the answer, the issue with any regulation is that it tends to engender more barriers to entry, not fewer. And, so far, nobody has worked out how to (centrally) regulate the internet

Speaking of regulation, the intention on the continent is to provide a smoother ride for crowdfunders in Europe. The EU has proposed a passporting system for crowdfunding platforms, giving them the freedom to operate across the bloc under one set of rules. The draft legislation would cover any campaign up to €1m over 12 months. Any larger raise would come under the EU’s prospectus and securities rules.

Meanwhile, February was the worst month on record for hedge funds that use AI and machine learning. The Eurekahedge Index, which has been tracking such funds since 2011, saw a 7.3 percent drop in its AI index last month – compared to the 2.4 percent fall in funds tracked across the broader Hedge Fund Research index.

Why was it so bad? The decline should probably be seen alongside the correction we saw in the markets last month. And there’s a suggestion that, because algorithms sell stocks to de-risk, the global falls could actually have been exacerbated by them.

Meanwhile, cheap cash means huge global funds are buying up swathes of Europe’s AI ecosystem. This Guardian piece explains.

While I’m thinking about investments (and savings), and given how close we are to the end of the financial year: according to finance information firm Defaqto, cash Isa rates have started to rise for the first time in seven years, with an average rate of 0.7 percent on offer, compared with 0.53 per cent a year ago. But to get the highest rates of around 2.25 percent, there’s a catch: you have to lock your money away for five years.


CAUGHT OUR EYE

Company

P2P stalwart Funding Circle has brought in the bankers ahead of an expected listing in the second half of this year. Sky reported that existing investors think the flotation will see it valued at over $2bn – far more than the $1bn valuation it achieved at its funding round last year.

Tech

Could planned obsolescence ever become a thing of the past? Something of Berners-Lee’s comments here: a Californian lawmaker says Apple must explain why it doesn’t want us fixing our own devices. Susan Talamantes-Eggman says she plans to bring in right to repair legislation, which would require firms to sell replacement parts, tools, repair guides and diagnostic software.

I think we’re all aware that a lot of what we buy falls under the “planned obsolescence” banner: it’s been designed to eventually break, so we go and buy new. It’s not just technology products – clothes are another offender. And I’m convinced that fresh potted herbs from supermarkets are sabotaged.

Crypto

The Bank of International Settlements has warned that, if central banks issued their own cryptocurrencies, it could create a serious risk to the global financial system. The cryptocurrencies would become rivals to cash, syphoning reserves from commercial banking and driving up market interest rates, the watchdog said. Full story here.

Have a lovely weekend,

Harriet

PS Read this if you want to wowed/frightened by the sheer scale of China’s tech ecosystem. It’s The Times, so behind a paywall, but the gist is that the country is moving far faster than Europe, or Silicon Valley. Mobile payments integrated with hiring practically anything, 1.8bn faces logged on a facial-recognition tool, entire smart cities built to test autonomous vehicles… Britain feels rather decadent.

About the author

Harriet Green

Harriet Green

Harriet Green is a former financial and business journalist. She left City AM earlier this year to set up a company that creates new forms of ownership in public services. She covered fintech, alternative finance and entrepreneurship for four years, but now you’ll more likely find her in a public convenience north of Birmingham. Harriet also works as a consultant for venture-stage tech firms.