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FinTech's overlooked opportunity: the rise of SME accountancy

FinTech is transforming our world: helping consumers pay off their bills to improving deals for conglomerate firms.This market is the promised land for Venture Capitalists. The market has produced deca-unicorn companies like Revolut, Klarna, and Stripe. Yet, the market is still in its infancy, with experts believing there is a multi-trillion-dollar opportunity waiting for technology to disrupt.

Multi-trillion-dollar markets come with a lot of noise, so spotting emerging trends are difficult. However, from our research, we noticed accountancy products for Small-Medium Enterprises (SMEs) is an emerging trend in the UK market.

Historically, Financial Services has had a barbell approach to its customers, focusing on large enterprises or consumers, neglecting those in the middle. In 2019, 5.9 million SMEs were operating in the UK, accounting for 99% of businesses. With the prevalence of the side-hustles as a trend rapidly growing, so will the number of SMEs operating. There is also a regulatory catalyst. The government announced in 2019 the Making Tax Digital (MTD) scheme, coming into effect in 2022. With FinTech business models already proved out in enterprises and regions, investing in start-ups in SMEs seems like a lucrative strategy for investors.

Fintech products for SMEs can be bisected into helping SMEs with their finances or their accountants. At Symvan Capital, we are bullish on accountancy products. 

Accountancy software for SMEs is nothing new. Sage offered the Sage Line 100 in the 1980s, Xero offered software in 2006, and Quickbooks launched in 1992, helping SMEs with bookkeeping and compliance. The big three platforms have evolved as they are now automating workflows for customers. Adoption has accelerated over recent years due to MTD introduced in August 2019, with 50% of customers using accounting software.

The role of accountants is not solely for bookkeeping and compliance but for business advice. Accountancy is not a core competency for most SMEs, so they rely on local accountants, often expensive, for business advice. The big three are yet to offer this service, so we are excited by those who can reduce the unit economics of finance advice while providing a high-quality customer service. With the high-growth trajectories of Xero, Quickbooks and Sage, we believe it is difficult for a new entrant to offer an end-to-end solution, so we are interested in start-ups that can integrate their solution into existing accountancy platforms.

Symvan Capital is excited to hear from those who have an ingenious business model that reduces the unit economics of providing financial insights and advice. Submit your pitch deck here.


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