Morgan Stanley brings diverse fintech innovation to London

Morgan Stanley is expanding to Europe its financial technology (fintech) programme that targets women and ethnic minority founders. The operation will start working with its first cohort early next year.

The Multicultural Innovation Lab, as it is known, will open in London and will target startups founded by women and people from ethnic minorities. This is part of a global programme launched by Morgan Stanley in the US in 2017.

In its first year, it will initially look for five startups, which will receive £200,000 investment each.

Morgan Stanley said that over the past decade, less than 3% of the venture capital funds invested in the UK went to teams of all-female founders and less than 2% to teams of all-ethnic minority founders.

Beyond the financial investment, an ecosystem of Morgan Stanley mentors and advisers, as well as external industry experts, will be created to support the startups.

Each lab will run for five months, with all startups then making a presentation to investors.

Clare Woodman, head of EMEA at Morgan Stanley, said: “Establishing a platform in London giving access to critical advice, experience and funding to women- and minority-owned enterprises is not only something we are well-positioned to offer, but also allows us to address a significant market inefficiency.”

David Cantillon, head of EMEA equities at Morgan Stanley, added: “Morgan Stanley is a leading provider of access to capital globally, and we believe we are uniquely positioned to help women- and minority-owned businesses reach a much more equitable slice of the funding pie.”

In the US, the programme has supported about 50 startups since 2017, with over $80m in additional funding raised by them since completing the Morgan Stanley accelerator programme.

The EMEA Lab will begin taking participant applications from January 2022. 

Diversity in fintech is becoming a more important theme as the finance sector seeks to increase digital innovation. Women and ethnic minorities are under-represented in the finance sector, but banks are attempting to address this.

Last month, Barclays Bank and US funding platform Anthemis brought a US initiative that invests in women in fintech to Europe.

The Female Innovators Lab, as it is known, is also being imported from the US, where it was established in 2019. It funds female-led fintechs from an early stage.

In the UK, there will be a $30m fund and fintechs will receive support from the lab team and access to office space in London.

Maria Scott, founder of fintech Tania, said there is a lot of work to do to level things up, but it is encouraging to see that awareness of the issue is increasing. “We need to keep working on this and keep attacking it on several fronts – role models, support structures of this type, continue to promote awareness and create new opportunities.”

And it is not just the fintech sector that lacks diversity, with tech startups in general lacking female leadership. A recent study by tech recruitment firm Spinks analysed 13,000 tech companies in the UK between March 2019 and March 2021 and, looking specifically at female representation in senior executive roles, it found that 57% of startups and scaleups (fast-growing startups that have achieved 10% or more increase in headcount or turnover over three consecutive years) had no leadership roles occupied by women.

Only 15% of tech startups had more than half of their top roles held by women, and just 5% had female-only leadership.