LendInvest founder Christian Faes: Why I left London for California
When fintech founder Christian Faes messaged with the news he was heading permanently to sunny California in June, he was keen to stress a particular point.
“It’s not ‘another founder leaving London’ story,” he said. “I’m still bullish on UK fintech, but have moved to the US for this next chapter.”
This week, however, over a video call from his office looking out over the misty Santa Monica coast, he is in a slightly less conciliatory mood with the country he called home for a decade and a half.
“I guess part of my thinking of moving to the US was I did feel like it was particularly difficult building a business in the UK,” he tells City A.M.
“In many respects, it goes back to the Brexit vote and even a year or two before that and all the distraction around it. Every meeting you would go into, they’d be kind of a mandatory 15 minutes where everyone would sort of vent about Brexit. I just think it was such a distraction.”
He’s “definitely not down on London”, he says, it’s “still a brilliant city”. But across the Atlantic and with the self-confessed “starry eyed” perspective of a recent move to the Golden State, Faes – the founder of one London’s few listed fintech firms Lendinvest – has done some thinking.
London decline?
Much ink has been spilt and many conference minutes eaten up in the defence and attack of London’s standing as a fintech hub over the past few months.
Just as when Monzo founder Tom Blomfield announced a few weeks prior that he was heading to San Francisco, Faes’s announcement was inevitably picked up as a symptom of decline.
At London Tech Week in early June, Rishi Sunak and Jeremy Hunt launched something like a counteroffensive against the prevailing narrative on the UK, welcoming with open arms scores of Silicon Valley tech bros and cashed up Asian investors in a flashy charm offensive.
Where Faes perspective on the debate is unique is its lack of any jingoistic fervour. He grew up Down Under and still speaks with a strong Aussie accent, first training as a lawyer and doing his initial stint in the UK as a corporate lawyer with Clifford Chance.
After returning to Australia, London then drew him back as a promised land of entrepreneurship. He co-founded property mortgage firm LendInvest, then Montello, in 2008 and steered the business through the fallout of the financial crisis.
“As an Australian looking at [London], that was the best place to be, you know. As a young kid aspiring to build a great business, it’s London or New York really,” he says. “I kind of felt like London or New York were equal choices.”
Faes was among the early crop of post-financial crisis fintech founders that rode a wave of good vibes and political support in the early 2010s as London became a pre-eminent fintech centre.
Fast action from the Financial Conduct Authority and vocal backing from the government catapulted the UK to the front of the pack on fintech globally. “Effective tax incentives and numerous government programmes designed to promote competition and innovation” were cited as the reasons for the UK’s world-leading status in a 2016 report from EY.
But even as fintech starts to take a more central place in the political debate again, Faes is not convinced.
“You had the prime minister and the Chancellor – David Cameron and George Osborne – they were real advocates for the Fintech sector. Not that dissimilar to now with Rishi Sunak. But it feels like it’s more lip service now than reality,” he adds.
Some of the recent efforts to champion the sector have missed the mark in his view. The attempt to label the UK “Unicorn Kingdom” and a focus on valuations in general are a particular target of his annoyance
“Fucking nonsense, you’re building a business not a get rich quick scheme,” he says.
“I can only assume government go to that rhetoric because they think it catches people’s attention and is a metric they can understand. But it’s so simplistic and wrong, actually,” he adds.
Mood music
While Faes’ LendInvest was a beneficiary of the good mood music in the 2010s, that shifted somewhat as it began to plot its move onto the public markets in 2020.
At the heart of the UK’s current efforts to reinvigorate its global standing has been reforming the public markets to welcome growth technology firms. LendInvest in that regard might be seen as the ideal candidate.
Faes moved from chief executive to his current position of non-executive chair in 2020 and oversaw the IPO process and was part of the roadshow team that looked to win round backers for the float. He says the step change from pitching venture capital investors to winning public markets backers in London was a sharp one.
“When you talk to VC investors generally they’re more likely to be thinking blue-skies and in a more ambitious way,” he says. “When you go to IPO, you then find yourself in front of balding, grey haired, sort of elderly men predominantly, that just aren’t really that interested in technology. That is the reality.
“And not only ‘not interested in’, there kind of seems to be this deep scepticism around technology.”
There lies the problem in London’s efforts to boost itself as a listing centre, he argues. The new tweaks rolled out by government and regulators to zhuzh up its appeal should be applauded and are “good initiatives” but the more tricky fix of staid “investor mindsets” remains.
He says LendInvest has felt the sharp end of that. Even as its funds under management have ballooned to £3,7bn and the firm has posted steady profits, its share price has cratered over 75 per cent since IPO to trade with a market cap of around £67m.
“There’s a lot of frustrations around that, but it is what it is,” he says. “It’s a good business. I think we just keep trucking on eventually, you know, people will realise the value of what we’ve built.”
Sunny outlook
But now as he finds himself in sunnier climes – perhaps because of that – Faes is still, if not bullish, then hopeful on the outlook for UK and London fintech.
“It’s always darkest before dawn, isn’t it? […] I think it’s easy to be quite down on the prospects for the country now, but I don’t think it’s structural decline. Hopefully not. I think it’s just been a tough period.”
He still takes a lift from a London-centric Fintech Founders group that has some 300 members all weighing in and supporting each other. The early stage investor base in the UK is strong too, he adds.
For now though he’s got things to be cracking on with Stateside. Faes has just launched the first venture out of his new fintech investment firm in the US, Faes & Co.
“Life is good” he says, the office is both near home and the beach. As we speak, the mist is clearing over the Santa Monica coast.
“In the summer I get this sea mist come across in the morning,” he says. “It feels like London in the morning. But other than that, it’s been really good.”